Dairy industry to pool resources in event of ‘hard’ Brexit

Milk processors on the island are planning to pool resources in the event of a hard Brexit, AgriLand can reveal.

LacPatrick’s new Northern Ireland plant could be brought into action to process milk for rival suppliers in the event of a hard Brexit.

Speaking exclusively to AgriLand, chief executive Gabriel D’Arcy confirmed that the firm had been approached by a number of other processors regarding post-Brexit plans.

For the last many years – and certainly since I arrived here – we have had to go to other processors to process our milk, simply because we didn’t have enough processing capacity.

“Now the role has changed; we have all the processing capacity – and indeed more – so, already, we have had substantial conversations with a number of other processors and we have agreed we will be helping those processors process their milk on this site,” D’Arcy said.

“It’s a co-operative thing – the co-operative movement is not only about co-operating among farmers – the co-op movement is also about co-ops co-operating with each other.”

LacPatrick dairy processing plant in Co. Tyrone
L-R: Enda Gallen, international sales manager; Gabriel D’Arcy, LacPatrick’s chief executive; Alan McCay, farmer supplier and board member; and Eamonn O’Malley, general manager at Artigarvan

LacPatrick is one of Northern Ireland’s largest milk processors. The new £30 million (€33 million) plant means that for the first time the firm will be able to process all of its Northern Ireland producers’ milk within the region. However, other firms facing Brexit are not in such a fortunate position.

Around a third of all milk produced in Northern Ireland currently makes its way across the Irish border. There are fears that a lack of any trade deal would mean tariffs would have to be paid on this.

LacPatrick’s new drying unit doubles the capacity of its Co. Tyrone site, meaning it can now process up to 2.5 million litres a day – more than three times the 750,000 litres currently arriving at the site each day.

Dairy consolidation

LacPatrick’s new processing plant and two new product lines will place the co-op among the biggest dairy ingredient manufacturing firms in the UK, but it’s not enough internationally – further consolidation of the Irish and Northern Irish dairy industry is necessary, D’Arcy warned.

He said: “We have to understand that to be successful in the markets we serve we certainly have to be very innovative, very market-oriented, very brand-oriented and to invest in those markets and brands – but [also] to be very competitive and on that basis there’s more need for further consolidation in the dairy industry.

As farmer-owned co-ops we have to understand that it’s the farmers who are paying for the lack of consolidation, i.e. the inefficiencies that are inherent in, for instance, the Northern Irish dairy industry where we have maybe seven or eight dairy companies all collecting a milk pool which is less than Glanbia’s milk pool, or is less than Belgomilk’s pool – Belgomilk is an amalgamation of 15 or 20 co-ops.

“So in the great big world that we are operating in, we are just going to have to be much more innovative, much more competitive and that includes things such as further consolidation.

“As a co-op we are in the business of long-term assurance for future generations of our suppliers and to pay a strong and sustainable price both now and into the future.”

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