Dale Farm CEO Nick Whelan told the Irish Farmers Journal that he is pleased with the co-op’s performance in year ending March 2025, which was the fourth successive year of record results for the Northern Ireland-based processor.

The financial performance showed an increase in turnover to £722.4m (€859.7m) while net profit before tax rose to £31.9m (€38m), up from £29.8m (€34.5m) a year earlier. Net debt remained stable at £61.1m (€71.2m), a figure that was approximately 1.3 times earnings before interest, taxation, depreciation and amortisation (EBITDA).

Last year saw the announcement of a £70m investment in cheddar cheese production at the co-op’s Dunmanbridge site in Co Tyrone. Whelan said that the commissioning phase of that investment is complete and that the “plant is performing extremely well”.

That spending is far from the end of investment plans at the Dale Farm. Whelan said: “The plan is to invest another £100m (€116.5m) over the next three to five years. Much of that will be strategic capital expenditure which will focus on key areas such as digitisation and automation.

“We’ve got to strengthen our core business. The big challenge in our business is cost and we’re constantly looking at how we can manage that. We’ve seen really good examples of how our investments in managing energy usage can drive down costs.”

Whelan made it clear that the investment programme would be funded by cash flow, rather than through substantial extra borrowing: “That’s quite unique when you look at other co-ops across Europe, or across this island. Our model is around generating high cash-flow to build the business.

“A high milk price and a high EBITDA both go hand in hand. Our EBITDA figures are, in relative terms, exceptionally strong and so is our milk price. We haven’t done this on the back of milk price. In fact, we’ve been a driver of milk price on the island while we’re providing that high EBITDA.

“It’s a big mantra in our business that we have to earn the right to be strategic. It’s grand spending a hundred million, but you have to earn the right to do it.”

Milk pool

Dale Farm’s milk pool has grown from 723m litres in 2017 to one billion litres today. Whelan said that if deliveries had fallen further from the 2017 total, the co-op would have been in a challenging position. Instead, it managed to steadily grow the milk pool to the current level.

“That’s probably the right number for us at the moment with the amount of capacity that we have. In our business, it’s all about getting your costs right and that means getting your efficiencies right, and that means having your plants near full capacity on a reasonably flat profile.”

On future plans for possible expansion of the milk pool, Whelan said the first thing the co-op has to do is to hold onto the billion litres.

“If someone was to say to me that we would be guaranteed that one billon litres in five years’ time, I’d probably take it.

“Having said that, our strategy is around growing that billion litres. But it will have to be done in a sustainable way. Whether that’s to do with carbon, or measures specific to the climate change bill, for phosphorous or for NAP, I think we’re up for that challenge.”

He also made clear that the ambition for Dale Farm for milk growth is to help increase production from the co-op’s current suppliers: “I’m not a big believer in going out and trying to aggressively take farmers from other co-ops. I think it about creating opportunities for your own suppliers to help them grow their business.”

Environment

Whelan said that Dale Farm already has a 37ac solar farm, and is “pro-actively” looking at further investment in the green energy space, and also is “really keenly interested” in the possibilities from anaerobic digestion (AD) and biofertiliser.

“Purely from an economic sense, a network of AD plants plus a biofertiliser facility in Northern Ireland looks very credible.”

Speaking on the wider environmental backdrop, Whelan said that the agrifood sector needs more time to adjust to the changes required: “Our farmers and our processors have proved over time that we can be agile and that we can work with significant change. This is not the first time the sector has faced a massive challenge. I have an inherent confidence and belief in the sector and in the players in it that we will come out of this. I’m not lying awake at night saying this is the end of our industry.

He insists he is not understating the scale of the challenge: “We are devoting a significant proportion of our bandwidth at a very senior management level to find solutions to this.”

Milk price

When asked to take his crystal ball out and predict where milk prices are going to for the rest of the year, Whelan was cautiously optimistic about the outlook: “It’s a difficult time of year to make predictions as we are just through peak supply and we’re seeing a little softness in some markets. However, we’ve come through a period where milk volumes have been up double digits and yet markets have been reasonably resilient and stable.

“The truth of the matter is that demand has been incredibly resilient and robust, which has been a really positive thing. I haven’t met the CEO yet who can tell me where the milk price will be in six months’ time, but having said that, it’s reasonably stable looking out and considering the milk flows we’ve seen, I think it’s a very strong market.”

Comment

There’s no denying that Dale Farm is on a strong run in recent years. The significant investment in the cheddar processing business really stood out last year, as it was announced when many other processors on the island had put their days of major capital spending firmly behind them.

The fact that Dale Farm has further investment plans for another £100m of spending, while also paying one of the strongest milk prices on the island, suggests that it is doing things differently, and fundamentally, this is true. The business model of Dale Farm is not one which would work south of the border. The steepness of the milk supply curve in the Republic, where peak milk week sees volumes which are multiples of the lowest point in the year, means that plants there cannot run at the kind of efficiencies which can be achieved in Northern Ireland – which has a much flatter supply curve across the year.

Dale Farm’s investment in cheddar seems to have been well timed, and the co-op has found a high-value customer for its whey production. If the co-op can complete its investment programme from earnings, then the future certainly seems bright.

However, those plans are reliant on Dale Farm’s milk pool. The biggest threat to that is similar to challenges faced in the Republic – producing the maximum amount of milk at farm level in the face of continued uncertainty over environmental standards.