22 May 1998

SW group aims for security in milk processing

By John Burns

A GROUP of West Country dairy farmers is investing in its own milk processing plant to provide a secure market and boost profits.

Peninsula Milk Processors – a new limited company formed by farmers who own and run Peninsula Milk Producers – will have a brand new 70m litre capacity factory operating in Okehampton, Devon, by late summer.

"We have the biggest milk field in the country, but apart from two main cheese processing companies there are no other outlets," says dairy farmer Sandy Loud, who chairs both companies and acts as executive director. The big dairy companies currently ship liquid milk out of the region and haul it back in bottles.

"Farmers are looking for security in the market, and the move will put more money back into their pockets, instead of giving it to processors." Company plans to move into other products will boost milk cheques further, she adds.

Half the £1.5m of capital for the initial phase comes from a levy on members milk, the rest from a Royal Bank of Scotland loan. The levy of 1.5p/litre supplied is taken for one year from last June or from when new members join. Shares in the company are issued pro rata to levy contributed, and can be sold back at any time.

250 employees

Initially the plant will have facilities for glass-bottling, poly-bottling and cream production. A plant manager has been head-hunted and nine more staff are being taken on, though eventually up to 250 employees could be on site, says Mrs Loud.

PM Producers started with 30 members in 1994. It now has 80 farmers supplying 50m litres of milk, though that is expected to hit 60m litres by October when 100 producers will supply milk from St Austell in Cornwall to Honiton in East Devon.

New members

Much of PM producers milk will continue to go to existing customers. Any surplus will be processed along with milk from new members, who will be taken on as required.

There is a waiting list for farmers keen to join the group, so the processing arm can build sales knowing that secure supplies are already in the pipeline, says Mrs Loud.

She attributes the rapid progress made since the decision was taken last year to move into processing to the attitude of members. "I am very proud of them. They are a dynamic group, not scared to make decisions. They do not talk and complain, they get things done." &#42

Sandy Loud, who chairs both companies, and managing director, Geoff Lawrence, at the new Okehampton site.