Dairy farmers who are owed almost £1m by the troubled Longslow Food Group fear they may never see the money.

The 55 suppliers have still to be paid for milk supplied in the few weeks before the company closed its Mochdre factory in North Wales.

The mid-October closure followed the loss of a major contract with retailer Spar to Dairy Farmers of Britain.

The debt, averaging almost £24,000 apiece, was supposed to be paid in four monthly payments ending January, 2006, but Longslow has defaulted on its second payment.

Philip Crewe, Longslow managing director, admitted to Farmers Weekly that further payments would not be made and is seeking a company voluntary agreement.

If successful, Mr Crewe added, the company would be able to trade as a local milk wholesaler, using profits to pay creditors, including farmers, over the next three years.

He said it would be in farmers’ best interests to vote for a CVA. “That way they will get a proportion of their money – not pound for pound.

“If we don’t get a CVA, we will go into administration. I don’t think farmers would get anything then – we have no assets to sell that are not tied up by the bank.”

Paul Williams, the local NFU group secretary based at Llanwrst, said: “The situation is critical. Longslow needs to be open with all members that are owed money so they can plan their businesses accordingly.”

* Mr Williams advised farmers to contact NFU Call First service on 0870 845 8458 for further information and legal advice.