Fane Valley and Lakeland Dairies in strategic ventures

Two dairy processing and agribusiness co-operatives in Northern Ireland, Fane Valley and Lakeland Dairies, have announced they will create two new joint venture businesses that will enhance economies of scale and overall competitiveness for their farmer members, milk producers and customers at home and abroad, they say.

Fane Valley and Lakeland Dairies are neighbouring and friendly societies. Recognising the opportunities presented by the continuing growth and expansion of the agri-food industry, on the island of Ireland and internationally, the co-operatives have agreed to a combination of their respective dairy and agribusiness operations for mutual commercial benefit.

Following the approval of the boards of each society, two specific joint venture companies will be established covering two lines of business which will benefit from merged resources. The first joint venture is being established by a merger and pooling of both of the societies’ feed manufacturing, sales and stores activities into a major agribusiness company to be managed by Fane Valley. Lakeland Dairies will be a partner and shareholder in the Agribusiness Joint Venture and will also be represented on the board of the new company.

Fane Valley and Lakeland Dairies currently have an annual animal feed manufacturing capacity of 310,000 tonnes and 190,000 tonnes respectively, with a broad range of high performance feed products sold north and south. The projected annual revenues of the agribusiness joint venture will be in the order of £125 million (€177.6m). 

The second joint venture is being established by a merger and pooling of both of the societies’ dairy processing activities and operations, to be managed by Lakeland Dairies. Fane Valley will be a partner and shareholder in the dairy joint venture.

In Northern Ireland, Fane Valley and Lakeland Dairies currently procure 250 million litres and 330 million litres of milk respectively each year for processing into a wide range of value added dairy products and food ingredients, all of which are exported worldwide. Combined with the total existing Lakeland Dairies milk pool, the Dairy Joint Venture will process over one billion litres of milk annually. This will enhance the overall capacity of both co-operatives to maximise returns from the markets in the interests of their milk producers.

The projected annual revenues of the dairy joint venture will be in the order of £480 million (€682.6m).

Fane Valley milk suppliers will receive the same benefits and provisions as Lakeland Dairies milk suppliers and Fane Valley will have direct representation on the board of Lakeland Dairies. Both co-operative societies will otherwise continue to operate on an independent basis and each will support the other in the operation of the joint ventures.

It is envisaged that the possibility of a full merger of the two societies will potentially be considered in the future. This would be subject to member approval in each co-operative.

Trevor Lockhart (right in photo), chief executive of Fane Valley, says, “This far sighted agreement represents the strong commitment of Fane Valley and Lakeland Dairies to support our members, milk producers and customers through the development of an even more competitive market position on a joint venture basis. The combined strength and backing of both co-operatives will ensure success for our agribusiness and dairy operations and will underpin the future success of our business.”

Michael Hanley (left in photo), chief executive, Lakeland Dairies, says, “The establishment of these strategic joint ventures will create further value and benefits for the producers and customers of both co-operatives. This development underpins our mutually shared ambition to provide the highest possible milk prices to producers. Through this combination, we are adopting an innovative and strategic approach to maximising our efficiencies and overall strength in addressing the growing worldwide market demand for dairy products and food ingredients.”

(l/r) Lakeland Dairies’ Group chief Executive Michael Hanley and chairman, Alo Duffy, with William MgConnell, chairman, and Trevor Lockhart, chief executive of Fane Valley Co-operative.