The dairy industry can recover from Dairy Farmers of Britain’s (DFB’s) plunge into receivership, with receivers at PricewaterhouseCoopers (PWC) making progress on protecting supplies and farm businesses.
That was the verdict of Gwyn Jones, chairman of the National Farmers’ Union’s (NFU’s) dairy board, who said: “It’s a big issue for the people concerned, but for the industry, given a few months, things will settle down.”
However, he said some other dairy co-operatives were still vulnerable to the intense competition in the liquid milk industry. And he described the situation leading up to DFB’s plunge into administration as “sheer bloody chaos”, adding: “You would have thought more would have been done to sort this out.”
PWC announced on Monday June 8 that it had sold DFB’s Lubborn soft cheese creamery in Somerset to Glasgow-based cheesemaker Lactalis McLelland, which produces the Seriously Strong Cheddar brand.
On June 5, Milk Link announced an agreement to buy DFB’s Llandyrnog Creamery in Wales and its associated operations, subject to legal agreement, safeguarding 300 jobs and securing milk supply for 300 farmers. The facility makes own-label and branded cheeses, ranging from Double Gloucester to Red Leicester and including its Cadog and Farmers Best brands.
Milk Link is expected to complete that acquisition by June 12. “This is great news both for Milk Link and the loyal staff and farmers who are at the very heart of the Llandyrnog Creamery,” said Milk Link chief executive Neil Kennedy.
The Organic Milk Suppliers Co-operative has agreed to take on the collection and marketing of DFB members’ organic milk. Further deals were being discussed with third parties as this story hit the web, with speculation rife as to who would buy its liquid milk business.
A spokeswoman for the receivers added that they were trying to calculate how many milk farmers would remain with the co-operative: “We’re trying to work out how big the milk field is at the moment. If a lot of farmers want to stay, we can try to find an alternative for them.”
However, Jones said other co-operatives were being selective over issues such as supplier location and size. He urged farmers to be similarly cautious. “A large percentage of DFB members are talking to other companies, but it’s no good jumping into another, poorer contract.”
The NFU has set up a Q&A advice document for affected farmers on its website. It is also pressing for all DFB farmer members to receive payments for milk deliveries in May and early June, which so far remain largely outstanding.
DFB employs 2,400 staff across five liquid milk dairies, two cheese creameries, one ingredients plant, 50 distribution depots and its head office. It supplies more than 500 product lines, serving major UK retailers and processors and has 1,800 farmer members.
DFB never fully recovered from the loss of a major liquid milk contract with the Co-operative Group last year, which led to its inability to provide competitive payments for its members. This prompted half of its farmer members to resign from November 2008 onwards.