Lakeland Dairies is close to securing a deal with one of the world’s largest infant formula manufacturers.

The Cavan-based co-op said a deal with Mead Johnson is imminent after working with the infant formula giant for almost two years on various trials. “We are conducting trials with Mead Johnson and we hope to get in there within the next six weeks,” Lakeland CEO Michael Hanley said at the Lismullen family farming conference last week.

Mead Johnson is one of the largest infant formula manufacturers in the world with some 12.3% of the global market share.

The company, which operates the Enfamil brand, does not make product in Ireland, but it is a major player at a global level and has been growing its market share in China. The Chinese infant formula market is worth an estimated €12bn, with the overall global market worth in the region of €50bn.

Lakeland already supplies powder to three of the four largest global infant formula manufacturers, namely Abbott, Danone and Nestlé. These three companies, plus Mead Johnson, make up 42% of the global infant formula market.

Hanley described the importance of high production standards when trading products on a global stage. “We export 98 out of every 100 litres of milk produced,” Hanley said. “All bets are off if we have a melamine scare (similar to what happened in China in 2008). We have an audit every seven or eight days… these are necessary to keeping standards as high as they are,” he added.

Lakeland may not be the only supplier to be in the frame to supply Mead Johnson, however. The Irish Farmers Journal understands that Glanbia could be in line to get access to supply Mead Johnson also. It is anticipated that one milk drier in its new Belview plant will be used solely for infant formula for the export market.

Optimistic

Meanwhile, Hanley said he is “positive and optimistic” about the future, despite the current pressure on the global dairy market. Lakeland forecasts that, by 2020, it will be processing some 1bn litres of milk, but to meet the demand from existing customers, it will still require more milk. “We will be short of milk over the next five years, even after our milk pool has 35% or 40% growth,” Hanley said.

He added that with prices set to dip in 2015 ,the “floor must be raised on intervention prices to support farmers”.

Hanley said: “We have customers for all our product, but we are at a market price and these prices are putting pressure on farmers.’’