Following an emergency board meeting last night, the chair of LacPatrick has been instructed by board members to initiate merger talks, the Irish Farmers Journal has learned.

It is understood that the board has agreed to seek strategic partners and the form that takes could be a joint venture, partnership or merger.

We understand the board will look for the best financial package available.

A statement from LacPatrick Dairies chair Andrew McConkey said: "The board of LacPatrick Dairies met on Tuesday 17 April and have agreed on pursing a number of strategic options with a view to identifying the best way forward that is in the interest of its suppliers, shareholders, staff and customers.

"This may or may not include partnerships, joint ventures, mergers and other opportunities to consolidate the dairy industry.

"The decision by the board of LacPatrick comes following a number of approaches from international and national companies from the sector in recent months."

Since it emerged last week that LacPatrick were not going to support the March milk price to farmers, frustration has boiled over for a number of milk suppliers, with industry sources suggesting several farmers had handed in written notice to transfer milk supplies out of LacPatrick.

Milk price

The board of LacPatrick Dairies met a week ago on 13 April to set a price for March milk. A price of 25p/litre (minus 2p/l on the February price) was set for suppliers in Northern Ireland, while suppliers in the Republic of Ireland will be paid 28.7c/l excluding VAT (minus 2.5c/l on the February price).

LacPatrick said the decision came on the back of continued weakness in the dairy markets, especially for powders.

McConkey said: “Making price cuts of any kind is always a difficult, difficult decision and a decision that is not made easily.

“We, as a board and a co-op, are very aware of the fact that the spring has been exceptionally tough on farmers with fodder shortages but we must ensure that the co-op remains in a strong financial position.”

Background

LacPatrick was formed in July 2015 as a result of the merger of Ballyrashane and Town of Monaghan Co-ops.

Following an election, whereby all board members were candidates, Andrew McConkey was elected chair with Robert Skelton and Keith Agnew elected as vice chairs.

LacPatrick currently handles and processes over 600m litres of milk annually from over 1,000 farmers, based all over the province of Ulster.

Champion and Ballyrashane milk are LacPatrick’s own brands but the company also produces brands for several high-profile retailers like M&S, Aldi and Spar.

The majority of LacPatrick output is sold under the LP (Leckpatrick) brand to more than 30 countries worldwide, including in west Africa, where it is the brand leader.

LacPatrick also makes over 30,000t of butter a year.

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