Arla and Milk Link merger could stimulate further restructuring

The proposed merger of Arla Foods amba and Milk Link could prove to be a catalyst for further radical restructuring in the industry, according to the Royal Association of British Dairy Farmers.

The RABDF has welcomed the announcement saying it will strengthen UK dairy producers’ positioning and their resilience to global price pressure.

RABDF David Cotton said Milk Link members’ farmgate price would 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 also predicted that it could lead to more major changes within the UK processing sector before the end of the year.

“This merger could prove to be a catalyst for further radical restructuring as processors will start to review how their businesses have been repositioned overnight,” he said.

The news of the proposed merger has had a warm welcome from industry organisations.

Mansel Raymond, NFU dairy board chairman, said the merger would lead to a stronger future for the industry.

“This is a hugely significant event and is the result of the patience, faith and commitment of Milk Link members who have been investing in their own future over the past 12 years,” he said.

“UK farmers have looked on enviously at the apparent disparity between UK and mainland European milk prices, but also at the strength of larger European dairy co-operatives which have used their scale and efficiency to command market leading prices and build market leading brands. This merger puts Milk Link members in a far stronger place with a more secure future.”

NFU Scotland milk policy manager George Jamieson said the union believed this type of initiative was needed to move the UK dairy sector forward.

“This initiative by Arla and Milk Link is highly significant and has real potential to deliver benefits to those farmers directly affected, and also benefit the wider dairy sector in the UK. Crucially, it is our understanding that Milk Link members will, following a transition period, be subject to the same pricing regime as their European counterparts. In Europe, the co-ops tend to lead on milk price, and have consistently delivered prices higher than those seen in the UK for the vast majority of the last decade.”

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