Between 1983 and 2015, there was a “stagnation”, according to Lakeland Dairies, which saw “generations of farmers missing the opportunity to enter the dairy industry”.
This was because there was a “ceiling on production – and that’s not sustainable”.
Today (Wednesday, April 14), cross-border dairy cooperative Lakeland announced its results for 2020. Its revenue increased by over 5.7% to hit €1.09 billion in 2020, up by €59.3 million on the prior year figure of €1.03 billion.
Speaking to Agriland, Lakeland CEO Michael Hanley and chairman Niall Matthews referred a number of times to the importance of having something sustainable – in every way – to hand down to future generations, and to entice new entrants into an industry.
‘A good place to produce milk’
The chairman said he think it’s “very positive when you look at the number of new farmers that are trying to get into milking cows in the last couple of years”.
“They obviously think it’s a business they want to be a part of. I think that’s a good reflection of the dairy business,” Matthews added.
Hanley said that Ireland “is a good place to produce milk” – it’s a place where farmers “look after their animals, after their environment, and they are more conscious than anybody of the requirement to do that”.
“Financial sustainability is very important here for farmers; and the farmers that I know and that we’ve worked with over the years, they go out of their way to look after the environment, and the proof of that is the drawdown and the investment in funds in animal housing, animal welfare, etc, over the years,” he said.
“Farmers look after their animals, after their environment, and they are more conscious than anybody of the requirement to do that, and be able to hand land onto the next generation in a better state, and more sustainable state than anybody else.”
‘A sustainable dairy industry has to be a profitable industry’
With uncertainty still surrounding what will be expected of agriculture as part of the new Climate Action Bill, and new figures for 2020 from the Environmental Protection Agency showing that the dairy processing sector saw an increase of 4% in emissions, Hanley commented:
“From an Irish point of view, we have the best carbon footprint in the world; it’s the best place to produce milk and from a financial point of view, dairy outperforms all other farm enterprises – so a restriction on dairy in that context would have to be highly questionable.
“A sustainable dairy industry has to be profitable industry; stakeholders have to be able to generate a living for their hard work; and that’s a critical part of it.
“You need new blood coming into an industry and farmers controlling in an environmentally friendly fashion, which they have always done – they’ve invested and borrowed money so that they could look after their animals; they’ve invested in slurry management systems over the years and have complied with spreading deadlines.”
Matthews said that “we all live under the same sky – there’s no point in us cutting back on production and production is ramped up somewhere else in the world at maybe a higher carbon footprint”.
“The demand is there for dairy products throughout the world; it’s growing year-on-year by probably 1% to 2%. If demand is there for that product, I think it’s best that it’s produced in the most sustainable manner and I think Ireland is that producer.
“There’s plenty of things we can do at farm level. Not alone does it increase environmental sustainability, but it’s probably more sustainable in a financial way for farmers as well.
“There seems to be a strong correlation between what’s environmentally friendly on farm level and what can be financially sustainable as well, so I think there’s scope there to reduce footprint and still be very sustainable in a financial way.”
Lakeland battling with Brexit
Both the chairman and chief executive identify “a lot of challenges throughout the year” in 2020. Along with the business having to adapt to operating alongside Covid-19, there was unsettlement with Brexit.
“We have been battling with Brexit for the last four and a half years – so that was nothing new for our horizons and workload for 2020,” Hanley said.
“Brexit was potentially a major issue for our business – but the [Northern Ireland] protocol was put in and there was a free trade agreement negotiated with the UK and the rest of Europe just prior to Christmas.
“The other thing that came with the protocol was the SPS alignment and free movement of product on the island of Ireland. That was good news for all Lakeland farmers.
“We’re exporting product without issues through Northern Ireland into Great Britain; and milk continues to flow north-south across the border.
“There’s a few tweaks still in relation to free trade agreements for mixed milk. We’ve raised those issues with all concerned, particularly in Brussels, and I would feel that’s a work in progress at this stage.”
The year ahead
Thinking ahead, Matthews, who is “fresh into the seat in February” of this year, said that a supplier survey that was put out around six weeks ago will “probably give us direction in what we need to do in the next number of years in regards to processing capacity, and what’s the anticipated supply of milk going to be in the next few years”.
Hanley is hopeful for significant progress in the rollout of the vaccination programme to “get back to business as normal”.
He wants Lakeland to be in a position to pay “a competitive and sustainable price to farmers”, so that they “can make a living; reinvest; educate their families; make repayments; and develop other businesses”.
“It’s important we have a sustainable business that’s capable of doing that – because there’s a lot of farm families investing, borrowing money, working hard to make a living out of their farms and it’s critical that they have a good milk purchaser – to give them confidence, give their bankers confidence and to give their families confidence going forward for the next generation,” he concluded.