‘If you want to shine you have to surround yourself with stars’

FEATURE INTERVIEW

Lakeland Dairies CEO MICHAEL HANLEY has been working with the co-op and its Killeshandra predecessor since 1986, and has held numerous management posts. He was appointed CEO in 2006, a difficult time for the co-op which had posted losses the previous year. Since then he has navigated safe passage through the turbulence of numerous fodder crises, Brexit, Covid and countless other challenges.

Lakelands has not only survived, but thrived and pursued an ambitious programme of expansion, most notably 2019’s merger with Monaghan based LacPatrick. When he retires next month, Michael will leave a co-op in rude health and with a turnover of almost €2 billion. A Strokestown native, his roots are now firmly planted in Cavan, where he and wife Valerie have reared their family, Niamh, Sean and Eimear. Michael is the worthy recipient of the 2022 Lifetime Achievement Award.

ANGLO-CELT: You collected the award for the Overall Winners in the Cavan Business and Tourism Awards on behalf of Lakeland Dairies back in 2013. Did that award hold any significance for the co-op?

MICHAEL HANLEY: It’s a great vote of confidence in the business, it’s a vote of confidence in the farmers, the employees, and the entire business model. It’s a platform for international recognition. Recognition on your home turf is a great bonus when you go to sell internationally across the world in 80 different markets

AC: How do you see your relationship with supplier farmers?

MH: I’ve worked with the farmers for over 36 years now and I would feel that I’ve built up a good strong trusting relationships with our milk suppliers over that period of time. Looking back, you went into yards where there children playing with a toy tractor or toy car and now that individual is married and they have their own kids with their own toy tractors and their own toy cars, so over the years you would get to know second and third generations, and great great people in the Lakeland catchment area - we’re spread over 15, 16 counties - they have great hard working people, good people to work with.

AC: What was the toughest challenge you faced during your time in Lakelands?

MH: I suppose the toughest period was the birth of Lakeland and maybe going as far back as 1990, because at the time Goodman International had a big offer on the table to farmers, but the farmers of the Northeast, and the old farmers of Killeshandra/Lakeland ignored that and decided to establish a strong farmer cooperative in the name of Lakeland. That was one of the biggest issues and overcoming that was that was a significant challenge back in 1990.

AC: Was it a tough battle to convince them?

MH: It was a tough battle. I was head of member relations at that stage so I was spear-heading that campaign at farm level in relation to winning the hearts and minds of farmers. I have to say that was the biggest challenge because that was a real threat to the co-op: Goodman taking the co-op private and Lakeland never being formed.

AC: Any other notable challenges faced?

MH: There was a fodder crisis as far back as 1986, the first year that I joined Killeshandra/Lakeland, and then there were other fodder crises I think maybe 2009 and ’13, and again maybe in ’15 or ’16 - bad weather from year to year driving those fodder crises, Covid has been a big challenge for the business over the last two and a half years, and we’ve come out the right side of that.

Another really big challenge for the business was foot and mouth disease back in 2001. The Border was closed - milk couldn’t cross the Border without being double heat treated, and that was a major challenge for the business. They were character builders, but we have come through it and are out the other side, and our milk suppliers and our shareholders have come through it as well. That’s what Lakeland is about - the entire stakeholders - the milk suppliers, the employees the customers and shareholders of the business.

Also, when I got the job as CEO in 2006, the business had lost almost €13 million in 2005/06. That was a challenge, to bring the business back to profitability. There were a lot of challenges, but that was up there with the [stopping] Goodman campaign in 1990 to form the business.

AC: Where does the LacPatrick merger rank in the Lakelands story?

MH: It always made sense for the coops in Cavan-Monaghan to merge and that opportunity prevailed in 2018 and 2019.The merger went ahead, farmers voted 96, 97% in favour of the merger, and it’s a merger that should have taken place 10, 15, 20 years prior to that but look it: better late than never. It is the largest dairy co-op merger ever on the island of Ireland, so it’s up there. It has given tremendous scale and a broad customer base and broad set of facilities and technology to the current Lakeland business and I think, when you look at milk price and the way the business performed, that scale has given efficiency, and it has given increased milk price back to the farmers. We’re currently paying one of the strongest prices on the island. Our goal is to be as efficient as we can and to pay the best possible price to the farmer for every litre of milk.

AC: Do you see Lakelands continuing to expand in the coming years or has it reached its natural limit?

MH: No, I think Lakeland is a very strong business, it has a strong balance sheet, a strong EBITDA [Earnings before interest, taxes, depreciation, and amortization] of over €55 million in the business, well invested sites and plant. It has a good raw material supply, it has good quality farmers, it has good staff and technology in the business, and it has a great set of customers that want to continue to buy, and buy more Lakeland product on a year on year basis. So the foundations and the structure is there for Lakeland to become bigger and better and to grow as it moves forward into the next decade and so on.

AC: You said in a Celt interview a decade ago that a family farm milking 80 cows would always be a viable option.

MH: I do I stand by that. There is a good standard of living to be made in rural Ireland on an 80 cow dairy farm, that’s well run and where a farmer and family look after their business well, and I stick by that.

AC: How do you view the continued record milk prices: a new normal or a pleasant blip that’s not sustainable?

MH: Farmers deserve a good price for their litre of milk and for their work on farm and for their investments. They’re not guaranteed that. I would say 2022 has been an absolute special year in relation to returns from the marketplace, driven by a number of issues and in particular, one has been the reduction in milk supplies from large producing areas across the world, the likes of France, Germany, New Zealand and even America, and as a consequence price and markets have been very strong in 2022.

So also have the input side of things: fertiliser prices and feed prices, particularly driven by the war in Ukraine, so farmers were entitled to, and needed a higher price in ’22 versus previous years, to pay the higher prices.

Currently we’re at a seasonal high, but the average price in 2022 has been a good price, and at record highs. Is it sustainable? Milk supplies have improved in other parts of the world and milk production has picked up, so I think we’re absolutely at the top of the market and there will be some softening in that price as we go forward.

AC: What had caused the decrease in production in those major countries?

MH: There was an issue of labour, Covid and, I would also say higher temperatures - maybe bad weather in New Zealand and a dryer scorched earth across stretches of Europe and North America, plus the higher costs of inputs as well - might have scared some people off earlier, before milk price really improved as the year went.

AC: Looking back on your Lakeland career what gives you most satisfaction?

MH: Initially I start out with big bale silage and coordinating that idea. That was my first job in 1982. The old Lakeland in Killeshandra and a milk buying company had a joint effort together to get farmers to move away from making hay to make better quality silage, as in baled silage which was weather proof. It was my job to get farmers to take that on board. There were five balers put on the road and I was big bale silage coordinator, and it worked. That idea has grown and has become very successful. Making big bale silage has spread as a concept across the entire country so I’m proud of that.

Also, looking back on the Lakeland business, which is much bigger, starting from the birth and growth of Lakeland to become second largest co-op in the country with an EBITDA of over €55 million and a turnover of almost 2 billion litres and €2 billion. That’s sweet.

AC: What’s the best advice you could give an emerging business?

MH: I would say the advice is to work hard, believe in what you’re doing, and get good people around you because, if you want to shine, you have to surround yourself with stars.

AC: What does retirement hold for you?

MH: I’ve 36 years done in Lakeland Dairies and I’ve enjoyed every day - 16 years as CEO of the business. The plan is retirement at this stage, spend a bit of extra time with family and friends and then we’ll see where that takes us.