Milk merger firm hits back at critics

Milk Link has hit back at criticism from city analysts that its recently proposed merger with First Milk threatens competition within the cheese market.

“The merger means we would have a 20% cheese market share in terms of UK production, but cheese is an international market,” said Milk Link’s corporate affairs director Will Sanderson. “To put it in context, 20% of the UK market share is only 1.5% of the European cheese market and less than 0.5% globally. We don’t think it raises any issues.”

He explained that the merger would make the company a worldwide player. “This is about the dairy industry having an increasingly global focus, both on commodity and retail products. The merger will enable us to have critical mass and investment capabilities to compete with Arla, Campina, Dairy Farmers of America and Fonterra.”

Sanderson added that the UK market had become an easy target for firms wishing to import. “The balance of trade deficit is more than £1bn on dairy products. This is an indication that this [supplying the UK market] is a very attractive offer for companies abroad.”

Provided that the merger goes ahead, the new company is expected to be operational by April next year. It plans to invest in processing assets, research and development and people, and it isn’t ruling out production abroad. “It’s not so much about cutting costs, as expanding,” said Sanderson. “This [the merger] was appealing because we will have the opportunity to invest more heavily in processing, though we’re not limiting our options to the UK.”

First Milk and Milk Link have complementary processing facilities, he explained. “In Scotland we have two major processing plants - one milk and one cheese - but we don’t have high numbers of farmers in that area, whereas First Milk does. One of the synergies will be that instead of First Milk handling milk to get it processed and us having to buy milk from other people, we can work together.”