Co-op News October 2019: Sustainable Development

IRELAND
Lakeland Dairies co-op announces 68 redundancies
A major all-Ireland dairy processing co-op
is making lay-offs at its site in Monaghan
to reduce operating costs.
On 30 August the board of Lakeland
Dairies co-op approved a plan to adjust
its processing activities at the site
in Monaghan, which will see some
operations cease or transfer to other
locations. A total of 130 staff are employed
at the Monaghan site, 68 of whom will
be made redundant. Some employees
will be redeployed elsewhere within
the business.
The Monaghan site belonged to
LacPatrick, which merged with Lakeland
in April to form the second-largest dairy
processor in Ireland.
The co-op said the Monaghan site had
faced significant and recurring losses
prior to the merger. It also argued the site
had “little or no investment in processing
capabilities over the years.”
Michael Hanley, CEO of Lakeland
Dairies said: “It is essential for us to realise
efficiencies from within our merged group
of processing facilities and to achieve
sustainable profitability in the interests of
our farm families on a long-term basis for
the future.”
He argued the plan would reduce
operating costs while providing for
the continuation of strategic units for
the business. “Arising from this
adjustment of operations, it is regrettably
the case that a number of redundancies
will be required in Monaghan and we will
enter into consultation to discuss the roles
that will be affected.
“We will also be providing details of any
redeployment opportunities available in
other parts of the Lakeland Group. Of the
130 jobs in Monaghan, there will be some
68 redundancies on the site while some
will be redeployed elsewhere within the
Lakeland Group.
“Lakeland Dairies processes over
1.85 billion litres of milk annually
and allocates this milk as flexibly and
profitably as possible to different sites
and into different product areas which are
in the highest market demand, yielding
the highest milk price, at different times
throughout any given year. While this
development is difficult for everyone
concerned, it is necessary to ensure we
operate our business in the most efficient
manner. It has been the core strategy
of Lakeland Dairies to ensure that all
sites are run as profitably as possible to
ensure we are well-positioned to meet
the demand of a competitive global dairy
market while protecting the future of our
3,200 farm families.”
u Irish co-ops in milk price row - p20
DENMARK
Arla Foods reports positive half-yearly
results but warns about hard Brexit impact
Multinational dairy co-op Arla Foods
has managed to increase its revenue
and profits during the first half of its
financial year.
Revenue for Arla – owned by 10,300
dairy farmers in Sweden, Denmark,
Germany, the UK, Belgium, Netherlands
and Luxembourg – increased to £987m
for the first half of 2019, 3% more than the
same period in 2018.
During the six months, Arla was also
able to provide its farmer-owners the
same milk price. Revenue increased for
some of its brands such as BoB (46%),
Lactofree (6%), Organic (12%) and Arla
Pro (48%), helping to drive the total
Arla strategic branded revenue growth
by 7%.
The co-op said the positive results had
been determined by decreased market
volatility, the success of its transformation
programme, a strong branded agenda
and a co-operative mindset.
Natalie Knight, group CFO, said: “We
have continued to build engagement
and relevance of our brands through
innovative products, brand activation
and digital content. Consumers are
pushing for more nourishing and
sustainable food choices, which is why
our intensified climate agenda will help
increase both the understanding of our
farmer owned co-operative model and our
competitive advantage”.
In October 2018 Arla launched its UK
360 programme, which aims to develop
an animal welfare and farm management
standard for its farmer members. The
co-op is working with retailers to support
farmers during the transition.
Also in 2018, Arla started a threeyear
transformation programme called
Calcium which has delivered €97m of the
€75-100m full year target for 2019.
The co-op believed the programme
could deliver at €100m in 2019 although
it admits that savings will be significantly
lower in the second half of the
year compared to the first half.
In terms of full-year expectations,
Arla warns that external factors that
could negatively impact these, along
with the volatility of the global milk
markets. The co-op’s revenue projections
for full year 2019 are €10.2-10.6bn
with the net profit share at 2.8-3.2% of
the revenue.
But a potential no-deal Brexit could
negatively impact the outlook, warns Arla.
18 | OCTOBER 2019