Listen: 'Optimistic' Lakeland switches on new drier despite weak market

Hanley was speaking at Lakeland's milk quality awards ceremony in Virginia, Co Cavan.

"We have successfully completed our investment in a new milk drier plant at Bailieborough," he said. "When it comes online, this means that we’ll produce 150,000t of high quality milk powders on the Bailieborough site along with about 21,000t of butter annually from the business. "

Listen to an interview with Michael Hanley in our podcast below:

He added that last month's acquisition of Fane Valley “will create further economies of scale” for the co-op now collecting 1.1bn litres per year from more than 2,500 farmers in 15 counties.

We have customers, a strong list of customers with growing requirements for dairy

Hanley told the Irish Farmers Journal that the co-op would commission the new drier without delay, despite the fact that "world dairy markets have been and are in turmoil".

"Lakeland has always been very optimistic in relation to dairy markets in the medium to long term and this is totally predicated on the fact that we have customers, a strong list of customers with growing requirements for dairy," he said. "For us, and the problem for everybody else, is the fact that benchmarks that are applying out there, whether it’s Dutch pricing or GDT – those prices have been on the floor at below intervention levels, so we badly need those prices to harden."

They are small positives but we’ve seen none of those positives for the past two years.

Hanley has identified positive signals including hardening oil prices and increased demand from China and from EU intervention. "Albeit at a bad price, intervention is a new customer; it has purchased almost 300,000t of product at this stage," he said.

He also mentioned supply slowdowns in the UK, France, Germany and lower forecasts for New Zealand's output next season.

"They are small positives but we’ve seen none of those positives for the past two years," he said. "So relatively, it’s positive, but we have a long, long way to go."

Fixed milk price scheme

Hanley said the recent market volatility had pushed Lakeland to offer its first fixed milk price scheme last month, adding that the offer was likely to re-open soon.

"We offerd 5 or 10% and a lot of people went for the 10% option in the fixed milk price scheme. Some people wanted more than 10% but we limited it at 10% and we will now go back and review it and see can we develop further options to offer to farmers as we go forward," he said.

Echoing the discussions among Lakeland suppliers around the room, Hanley added: " What our farmers are telling us is that they want certainty."

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Lakeland milk price drops by 0.5c/l