The joint venture businesses recently announced by Lakeland Dairies and Fane Valley Co-op had been in the gestation phase for up to a year,” according to Lakeland Chief Executive Michael Hanley.

“This is not a knee jerk reaction to the current world dairy market situation,” he said.

“There has always been a tremendous degree of trust between the two co-ops. Lakeland has had a strong working relationship with Fane Valley for many years. We are close neighbours, after all.

“Nor did the new arrangements come about as a result of one organisation putting a specific proposal on the table. Both co-ops mutually recognised that it made perfect sense to move forward on this joint basis. Momentum started to build in this regard over the past 6 months.”

Hanley also believes that the setting up of the two new businesses – one dairy: the other agri-business focussed - will yield a discernible benefit for farmers.

“From a business perspective the potential to add value and deliver efficiencies of scale makes total sense,” he said.

“And the positive impact of these developments will quickly filter down to the farm gate. From a producer point of view there will be a totally seamless transition to the new arrangements.”

The new dairy business will be the second largest processer of milk on the island of Ireland.

“All existing Fane Valley customers will automatically come under the Lakeland contract of supply conditions. And we are also committed to expanding our milk pool still further,” said Hanley.

The Lakeland Chief Executive also confirmed that it will take until the end of the year to complete the due diligence requirements associated with the establishment of the new businesses.

“No money has changed hands, although all relevant assets have been valued. This is a good deal for farmers in the Lakeland and Fane Valley catchment area,” he said.