Merging of the giants: What do Lakeland suppliers think?

The recently-announced merger between Lakeland Dairies and LacPatrick Dairies “is the way forward” – but will take time, according to Lakeland supplier Thomas Rogers.

Thomas is a dairy farmer from Carnans, Co. Cavan. Speaking to AgriLand in tonight’s episode of FarmLand, he outlined his views on the move and what his initial reactions were.

“The first talks about it were a surprise that Lakeland was going down that route of a merger – it looked scary in the beginning.

The Cavan farmer explained that at the time rumours were rife of a lot of debt and borrowings; however, when the Lakeland regional committee met to discuss the matter, he learned that things were not as bad as talk had suggested.

“The debt is not that big and the overall picture, with Lakeland – and Lakeland’s performance and track record over the years – I can see no problems.

I’d say too that there’s a few new products in the mix which I think will help Lakeland’s basket of products, which should help to balance the price of milk and keep the milk price a bit leveler than it is.

“It shouldn’t be so volatile – but it will take time.”

Thomas noted that there should be good savings emerging from the unification based on where the milk platforms are and cartage and rationalisation, which should in the long run mean more money for farmers, even taking the cost of merging into account.

In the short term, the Lakeland supplier does not believe that the merger is going to affect milk price.

Global market is going to affect milk price and at the moment there’s a lot of product about.

“Now is not looking what you’d call real good for next year with the amount of product that’s floating about and you’d be hoping that, with the merger, the cost-base would be reduced and maybe you’d get more milk down that value-added chain and hopefully take that volatility out of powders and butter.”

Milk price is going to be under pressure, he noted.

“Everyone’s trying to produce more – but more is not everything, if you have more volume and less price. What you want is a better price and maybe stabilise the volume.

The value-added route is the way to go. Whether you’re milking 100 cows or 500 cows, if you haven’t a margin for yourself it’s no good.

Thomas believes that one area of saving for the new entity will be transport.

“There’s crisscrossing and there has to be savings made there. Two lorries going down the one road for two different suppliers; there has to be savings there.

“I know those savings should come back to the farmer – they won’t come back initially but over time when it all pans out I think Lakeland’s cost base will reduce for producing the product, and the lower their cost base is the more they’ll be able to pass back to the primary producer.”