Dutch dairy co-ops Friesland and Campina have announced they are considering a merger.

Such a deal would create one of the world's largest milk co-ops with over 17,000 members in Holland, Belgium and Germany.

The new co-op, to be called Zuivelcooperatie Friesland Campina, would produce about 9bn kg of milk and have a turnover of over €8bn.

If the merger talks were positive, the two co-op's members would be asked approve the move in the middle of 2008.

Tom Hind, senior NFU dairy adviser, said the merger would not directly threaten UK farmers, but showed the direction the industry needed to be heading.

"It's not come as a surprise and shows that from a UK point of view we can't afford to stand still.

"The merger between Milk Link and First Milk is just be the start of the rationalisation that is needed."