Major new dairy co-operative formed

The Milk Group, a Cheshire-based company founded in 1994 with 1,200 milk-producing members, has merged with Zenith Milk to form Dairy Farmers of Britain.

It is an important move for Pembrokeshire producers like Matthew Watkins who have contracts with The Milk Group.

He defected from Unigate last July but admits it co-incided with a difficult time at the co-operative.

In retrospect it was probably the worst thing we could have done but I am very optimistic about this merger, said Matthew who farms near Newport. Zenith Milk is a two-year-old Staffordshire-based co-operative with 3,000 members. Both businesses currently produce a total of 2.3 billion litres annually.

Matthew views the merger as essential to the future stability of the milk price. In his opinion, the blame for the decline in milk prices over the last six months lies with the milk co-operatives. The price has been driven down by the co-operatives under-cutting each other, there is a need for rationalisation, he insisted. Three pence a litre has been lost to producers through fragmentation, a lot of money has been lost to milk tankers crossing each other all over the place.

He suggested that the time had come for the directors of the various co-operatives to put the needs of producers first. Each co-operative has its own board of executives and, in my opinion, they dont want to sacrifice their own careers for the good of the industry.

The producers have got to force this forward and force those executives into making moves towards further mergers.

The so-called new generation Dairy Farmers of Britain co-operative has been welcomed by the Farmers Union of Wales.

Its milk committee vice-chairman, Dai Davies, said it would become a significant processor within the industry.

Many European producers have invested money year-on-year in co-operatives which has enabled them to secure large-scale processing and capture more of the added value when milk is turned into products, he said.