A lot has changed since the creation of LacPatrick almost two years ago following the merger of Ballyrashane and Town of Monaghan co-ops. With a combined turnover of over €300m, employing 320 people where over 1,050 farmers deliver 600m litres of milk annually, the merger, while overall successful, has not been without its challenges.

LacPatrick CEO Gabriel D’Arcy says the co-op is almost unrecognisable and has gone through a complete transformation. There is new senior management, a new strategy, new governance structures and new investments, which give the co-op purpose according to the chief executive.

Governance

Some 91% of shareholders voted in favour of the governance review establishing a council and a board at a special general meeting last week. D’Arcy says that with this now in place, along with the clear strategy and dedicated employees, that the co-op was in a strong position to create long-term value for members.

He says that while it took a second vote, it was complex but it showed intent and the board listened to shareholders and made the amendments. He adds that 99% of suppliers are also members of the co-op.

Artigarvan drier

With some 500m litres of its milk sourced in Northern Ireland, and 100m litres in the Republic of Ireland, it made sense for LacPatrick to invest on the northern side of the Irish border.

The new drier at Artigarvan, which is a €42m investment, is going to plan, according to D’Arcy. He says it is currently on budget, on time and will be fully commissioned by mid-July.

He says it processed 750,000 litres of milk over a seven-hour period last week. He adds that had the 7.5t drier not been present there would have been a pinch point on the island to process all the milk. He says this drier will add 1.5m litres/day to the current 1m litre/ day capacity on the site.

He confirms that effluent capacity would not cap processing capacity and that there was adequate effluent capacity on site due to the design of the plant, which uses less water and has less waste coming off it.

Brexit

D’Arcy, says in the event of a hard Brexit, this new investment gives Northern Ireland the ability to process all its milk for the first time. Currently, 600m litres out of 2.3bn litres are processed in the Republic of Ireland. He adds that this wasn’t the intention of the investment when work started in January 2016 and that “it was more for LacPatrick’s own business decisions”.

When D’Arcy took over as CEO in 2014, the business was processing 420m litres. Today, it processes 600m litres and he expects a steady 2% to 5% annual growth in volumes in the coming years.

North Africa

A large part of the focus is developing advanced milk powder products through its LP brand in these regions. D’Arcy says that while low oil prices haven’t helped these markets, they continue to displace New Zealand product and they are capturing an increased market share.

Butter

With consumer foods representing 20% of total sales and with a capacity to produce 40,000t of butter, D’Arcy says large retailers like to have security of supply and will never put all their eggs in one basket.

He says that with two butter plants, LacPatrick can become the sole supplier to a customer.

D’Arcy says that the recent move to contain the quality assurance bonuses in the base price was simply a move to incentivise suppliers and not to penalise.

He explains that “we must have 100% quality compliance on all our milk as there is growing customer and consumer demands to provide this”. He adds that to help producers, the co-op has designated field staff to assist suppliers.

  • Major reorganisation throughout the business.
  • Governance and board structures strengthened.
  • First major investment in many years.
  • Technical expertise taken on to improve milk solids.
  • Strong vote of confidence in vision and strategy in future of co-op.
  • Prepared for Brexit.