West Wales farmers should get 45% of the money they were owed when the Dansco mozzarella cheese plant at Newcastle Emlyn went into administration.

The pay out was boosted by a Welsh Assembly decision not to claw back any of a £1.64m processing and marketing grant awarded three years ago.

Around 90 farmers were included on the list of more than 400 creditors owed a total of £1.7m at the end of March, when Dansco was bought for £5.3m by the Canadian multi-national dairy company Saputo.

The deal, brokered by administrators KPMG, saved 130 jobs and ensured that the plant stayed in business. But it did not make Saputo responsible for existing debts.

‘Severe cash flow problems’

A meeting of creditors heard that Dansco’s debts included an H M Customs & Revenue claim for £714,000 and £115,000 owed to Mansel Davies Haulage.

Bizarrely, the cheese company’s directors had also run up a London congestion charge bill of £178,000.

With the co-operation of Saputo, farmer creditors have been offered the chance to recover what they are owed in full and repaying the difference out of their milk cheques over 24 months.

“This gesture will help the many producers who have severe cash flow problems,” said Aled Jones, who runs 190 cows at Morlogws, a few miles from the plant.

‘Better than anticipated’

He is owed about £10,000, a total increased when he joined the group of producers that continued to supply milk unpaid so that Dansco could be sold as a going concern.

“Getting 45p in the pound hurts, but it is a lot better than we anticipated. On the plus side we still have a local processing plant that is making daily collections and paying an above average price on time.”

Several producers were owed over £70,000 but the biggest creditors were the Lowry family, who were owed £97,000 for milk from the 450 cows they run at Gilwern, a stone’s throw from the plant.

Martin Lowry said the settlement wiped out a whole year’s profit, but he was ready to look to the future rather than the past.