Arla takeover of Westbury Dairies welcomed
The National Farmers Union (NFU) welcomed the announcement but asked First Milk to spell out to members its full implications.
NFU chief dairy adviser Sian Davies said: “It is pleasing that Arla and First Milk have agreed a deal which suits their particular business models. As with any change to operating systems, we now need to ensure that this strategic move contributes to delivering a better return to farmers, as well as increased stability.”
Farmers supplying First Milk were “still in a particularly difficult place and urgently need to see better returns” from the reshaped business, said Davies.
Important questions remained
Important questions remained over how this will improve the bottom line for dairy farmers and its impact on farmgate prices, according to the NFU.
Taking full ownership of the joint venture will allow Arla to optimise its UK manufacturing base, claimed the firm.
“Arla has just launched Strategy 2020 in which we aim to grow our business in eight global dairy categories and six market regions around the world,” said Arla Foods UK executive vice president Peter Giørtz-Carlsen.
“The Westbury site is now an integral part of that global network of Arla production sites and will benefit from being so, further helping the UK to play an even more significant role in our global strategy.”
The deal will enable First Milk to continue using the powder drying capacity at the Westbury site during peak milk production and at other pre-defined times of the year.
Core cheese and liquid business
First Milk chief executive Mike Gallacher described the move as a significant step in reshaping the firm around its core cheese and liquid business. “This follows recent announcements of our return to trading profit, the establishment of a new board and governance structure, and the sale in December of the Glenfield Dairy subsidiary,” said Gallacher.
“While the dairy industry remains exceptionally tough, the progress we have made over the last nine months gives us the platform to focus this year on improving the relative returns to our members.”
Westbury Dairies, located at Westbury, Wiltshire, operated a skimmed milk powder and bulk butter production facility. First Milk has shared access of the site in various joint ventures for the past 12 years.
Meanwhile, the NFU urged all milk buyers to find ways of helping farmers manage price volatility and create stability.
The union expressed disappointment at Müller’s announcement of a one penny per litre drop in milk price to all its suppliers.
NFU dairy board chairman Rob Harrison said: “Farmers must have some guarantee that milk buyers are doing all they can to manage price volatility for their own businesses as well as their suppliers.”
