Yesterday, Lakeland Dairies announced it was establishing two separate joint ventures with its Northern Ireland-based counterpart, Fane Valley. The first part of the deal will see the dairy processing business of each co-op merge under a single joint venture (JV), which will be managed by Lakeland.

The second part of the deal will amalgamate the animal feed manufacturing and agri-stores business of each co-op into another, separate joint venture, this time under the management of Fane Valley. The remaining businesses of the Fane Valley Group, including its meat processing business, Linden Foods, will remain separate from either of the JVs.

Farmer Reaction

Management of Lakeland called a meeting with farmers last night to discuss the joint ventures. A crowd between 60 and 70 farmers turned out for the meeting, with the mood described as generally positive.

According to Sean Conefrey, a Longford-based dairy farmer supplying Lakeland and Longford IFA chairman, there was overwhelming consent for the merger news.

“The majority were in favour of the merger. A lot of people spoke saying it was the way to go and praised the work of the board for organising the deal,” said Conefrey. “It’s a good deal as its increasing our milk pool and focuses energies more on milk processing.”

He added that the word repeated most by Lakelands chief executive Michael Hanley was “synergies”, as Lakeland hopes the deal will allow it to maximise efficiencies through further economies of scale, while also expanding its presence in Northern Ireland.

Overall, the consensus at the meeting was broadly positive, although there were some concerns raised, primarily from local interests, whether the Lough Egish mill might be some day closed now that it was becoming part of the Fane Valley feed business.

Dealings

It appears the origins of the joint ventures come from a prior relationship between the two co-ops. Lakeland has had dealings with Fane Valley in the past when it often sent milk to Fane Valley’s Armaghdown site for processing during peak production times.

Finally, when Hanley was asked about a possible full merger between Lakelands and Fane Valley, he said he could not answer, but it could be a possibility sometime in the future. Hanley added that he did not know how profitable the Linden Foods meat business was but was wary because the history of Irish co-ops in the meat business wasn’t great.