Arla cuts cheese to ease supply burden

The group, which is one of Europe's leading dairy processors, said that between 70 to 80 of its employees would be affected by the cuts to be made to four of its Danish plants and one site in Sweden.

The news reflects the growing pressure on dairy processors to restructure their operations to remain competitive amidst increasing raw material costs.

Production of edam, danbo, fontal, havarti and rindless cheese will all be reduced, Alra stated.

Arla said that the extent of possible lay-offs was not yet clear, with the company targeting non-permanent and agency staff.

Additionally, the group said it would also encourage staff to take holidays and attend courses, in a bid to avoid further upheavals to its operations.

"We are looking at all the options for retaining people as hopefully we shall need the staff again," stated Jens Refslund, Arla's production division director.

With the low season for cow's milk production commencing in the Autumn, Arla said it normally decided to cut production of its milk powder.

However, due to the current high price on the market for powdered milks, the group said it would cut output of its cheese brands instead.

Arla's Tim Ørting Jørgensen said the move was not expected to be a permanent strategy and that the company would review the situation when appropriate. "

Cheese prices are set to rise so we believe that over time, production of yellow cheese will increase," he stated.

Despite this optimism over the market, the company added that it remained uncertain over the future for its cheese brands even after the new year though.

It pointed to the fact that last week 187 of Arla's members announced their intention to leave the co-operative resulting in a reduction of 300m kg worth of milk.

The announcement is likely to mean further woes for European cheese production.

In June, Arla announced it was to cease production of emmental cheese due to increased supply pressure from the dwindling global milk supply on its operations.