Jobs at risk as dairy firm calls in administrators

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The Independent Online

The future of 2,200 jobs was at risk today after milk co-operative Dairy Farmers of Britain (DFOB) collapsed into administration.

DFOB - which employs workers at sites in the South West, the Midlands and the North East - appointed PricewaterhouseCoopers (PwC) yesterday following heavy losses and the end its contract to supply milk to the Co-Operative supermarket.

The firm provides 10 per cent of UK milk production, with 1,800 farmer members supplying over one billion litres to the food and drink industry.

Stephen Oldfield, partner at PwC, said: "My team and I will be focusing all of our initial efforts in working with the DFOB key suppliers and customers to keep the daily collection and supply of milk flowing.

"This will not be easy, but with the help of key hauliers and our customers I hope to be able to collect and distribute the vast majority of DFOB milk.

"I will also be focusing on the sale of the groups' hard cheese and liquids businesses to seek to try to secure the significant number of jobs in those businesses."

Administrators said the extent of the firm's losses last year meant it was unable to pay farmers an economical price for their milk.

Half of its members have resigned since November and these are serving their 12 month notice period.

The loss of the Co-Operative contract - which takes effect on 1 August - delivered a final blow to the already enfeebled business.

DFOB closed its Fole and Portsmouth dairies last year as it strove to achieve a return to profitability in its milk division. But it was still unable to pay a competitive rate to its members, causing the mass walk-out.

Its fall into administration also casts doubts on the firm's efforts to offload some of its divisions.

The firm sold Nene Valley, one of the country's top processors of packaged cream, for an undisclosed sum to Meadow Foods in March and PwC said it had also been in discussions with interested parties regarding its cheese operations at Lubborn and Llandyrnog, parcelling up the respective milk supplies with these cheese plants.

But administrators said none of the sales could be completed prior to the appointment of receivers, but "concerted efforts" would continue "with a view to seeking a sale of these businesses as going concerns as soon as possible out of receivership".

Lord Grantchester, chairman of DFOB, said: "Clearly, the decision to invite receivers is not an easy one, but the board was unfortunately left with no alternative.

"What is most important now is that the supply chain is maintained through to our consumers, that jobs are saved, and that there is a home for our members' milk."