Merger of dairy processors to impact on UK industry

THE STRUCTURE of the UK dairy industry has been changed dramatically with the news two major processors are almost certain to merge, writes Ewan Pate.

The proposal is that Arla Foods amba and Milk Link will become one business.

If it becomes reality, and there is little reason to believe it will not, the joint enterprise will have a turnover in excess of £2 billion and be the biggest dairy operator in the UK.

Arla Foods amba and Milk Link are farmer owned businesses but on a different scale.

Arla is owned by Danish, German and Swedish farmers and is in the global top 10 of milk processing companies, with operations in 13 countries and 17,000 employees.

Milk Link, although substantial in UK terms, is a smaller business with a turnover of £628 million, 1,300 employees and 1,600 farmer members.

The merged companies will process three billion litres per annum within the UK.

NFU Scotland has welcomed the proposal, which will directly affect a number of Scottish dairy farmers, saying it fits a vision which would see producers more closely aligned to global and European markets and move the milk price they receive on to a more equal footing with other EU producers.

The proposal will be subject to approval by Milk Link Members, the Arla Foods amba board of representatives and relevant authorities.

NFUS milk policy manager George Jamieson said: “NFUS has spoken to both Milk Link and Arla executives and will have further discussion to fully understand the agreement, but we believe that this type of initiative is needed to move the UK dairy sector forward.

“NFUS supports strong, well invested farmer owned coops, investment in innovation and processing capacity and developing new markets to allow the UK dairy sector to be competitive in the growing global dairy market.

“In that regard, this initiative by Arla and Milk Link is highly signif icant and has real potential to deliver benefits to those farmers directly affected.

“Crucially, it is our understanding that Milk Link members will, following a transition period, be subject to the same pricing regime as their European counter parts ,” he concluded.