Butter prices boost Lakeland revenues
BUTTER looks set to continue to trade at historically higher figures as the on-trend fat remains in demand, according to one dairy chief.
Michael Hanley from northwestern based Lakeland Dairies said butter prices and demand for dairy helped increase revenues by 28pc to €769.8m, up from €601m in 2016.
However, it also marked the first full year of milk supply from the acquisition of Northern Ireland-based Fane Valley that saw the group’s milk pool increase to over 1.2 billion litres last year.
Mr Hanley said they had restarted butter production last year at Fane Valley Banbridge to work through peak to process butter and cream. “It is operational today again and will handle the cream supplies from our operations through the spring and summer of 2018,” he said. “If we look back over 2017 you saw butter start at €4,000/t and going on up to €7,000/t and coming back to the €4,000/t mark. The positive in that is it was good and that is what drove the milk price for 2017,” he said, adding it was well ahead of the €2,400/t prices that prevailed a few short years ago.
“Prices of butter has strengthened and you are looking at butter as a more healthy product and the demand for butter seems to have improved across the world,” he said. “Butter looks to be trading now and is going to trade hopefully at a historically higher figure going forward than it has done.”
He said the acquisition of Fane Valley had given them a “safety net” and allowed them to mix and match their product portfolio in light of Brexit. The 2017 figures for the Cavan-based dairy co-op show the processing centres at Killeshandra and Newtownards continue to increase output year on year, with record volumes of butter products, ice cream, cream and cream blends. The food service division increased revenues by 23pc to €239.9m last year.
Revenues in the agribusiness went up 16pc to €61.7m last year on the back of over 200,000t of feed and 25,000t of fertiliser being sold due to farmers having to buy in extra feed late in the year due to weather.
Mr Hanley said the “heavy lifting” had been done in terms of the investment in stainless steel with the €40m third milk drying plant at Bailieboro officially opened last year. He said they were equipped to deal with the 4-5pc yearly rise predicted in their milk pool in the next few years.
The processor plans to target the infant formula market and adult-nutrition as partners to major producers such as Danone, Nestlé and Abbott. It pointed out Asia, China, Malaysia and Thailand were its major growth areas.