By Robert Harris

WORK on United Milks 40 million processing factory in Westbury, Wiltshire, has started.

Company bosses clinched the backing needed to safeguard the project just days before the 31 December deadline expired.

The plant will be built in two stages.

The first phase will see 800m litres of milk a year turned into butter, cream and milk powders, and will take up about half the site.

The second phase, still very much on the drawing board, is expected to produce added-value dairy products.

UM chairman Richard Ashworth and chief executive Don Morris signed the last documents hours before offices closed for the Christmas break.

“We had to get things completed by the deadline, or we would have had to return farmers money,” says Mr Morris.

“There is no doubt that this helped to concentrate minds.”

Plans for the plant, which is expected to be operational by mid-2002, were announced in April 2000.

About 450 farmers signed up to the share offer, raising 10.4m by August.

This was only half the amount originally envisaged, and, after some reworking of costs, left 5-6m to be found to secure a 35m loan from the Bank of Scotland.

Securing that money took longer than expected, admits Mr Morris.

Most of the third-party funding is loan stock, rather then equity.

“There is nothing in terms of venture capital, so United Milk remains 100% farmer-controlled. Voting is exclusively in their hands,” says Mr Morris.

UM has also created a new joint venture with two milk trading companies, Murray Vernon and Brooks McRobbie, called United Milk Marketing.

It will sell milk and milk products on behalf of UM.

“It will, above all, give a milk producer confidence to quit his present contract and know there is a professional marketing team to handle his milk,” says Mr Morris.

quota link Bruton Knowles

UM, which became a quota-holding group in October, declared a milk price of 18.6p for a standard 4.1% butterfat litre in the top hygiene band on every-day collection from 01 January, 2001. There will be no seasonal adjustments.

At least 200 UM members who did not sign up to the share offer will be targeted in a new membership drive, as will producers supplying other companies.

Although they will not be able to invest at this stage, there will be opportunities later on, particularly when phase two is finalised, says Mr Morris, who is planning meetings to aid recruitment.