RABDF hint at Anglo-Irish dairy merger

The possibility of a merger between a southern Irish co-op and First Milk in the UK has been raised by Royal Association of British Dairy Farmers chairman David Cotton.

He is a member of Milk Link, the co-op which has agreed to merge with Scandinavia’s Arla Foods.

Cotton predicted an Irish intervention, and also raised the possibility of Dairy Crest being purchased, in a Reuters news agency report which also quoted Milk Link chief executive Neil Kennedy saying, “Our view would be that there is likely to be further consolidation.”

First Milk and Dairy Crest could become the third and fourth British dairies to be gobbled up, following the acquisition in January of Scotland’s Robert Wiseman Dairies by Müller, a privately held German dairy group.

The UK is the third-largest milk producer in the EU after Germany and France, but cut-throat price wars among supermarkets, low farm-gate milk prices, and high input costs have weakened the farmers who own the UK’s milk co-ops. Now, the UK has just four key players left — Arla, Müller, Dairy Crest Group Plc and First Milk.

Mr Cotton welcomed the proposed Arla-Milk Link merger, saying farm gate price will no longer be reliant on what the co-op can get out of the UK marketplace, but what Arla Foods can derive from the global pool.

He predicted the announcement could lead to more major changes in UK milk processing.