Dairy bosses face collapse inquiry

MPs are to quiz former bosses of defunct farmer-owned milk company Dairy Farmers of Britain.

The Environment, Food and Rural Affairs Committee will hold the oral evidence session on Wednesday (6 January).

The session is being held as part of a parliamentary investigation into the collapse of the company.

Hundreds of dairy farmers lost thousands of pounds when DFOB went into receivership last year.

Those asked to give evidence to MPs include former DFOB chairman Rob Knight, former chief executive Andrew Cooksey and former board member Philip Moody.

MPs are holding the inquiry to consider the impact of the DFOB collapse on dairy farmers and the industry.

They are also investigating the company’s governance and accountability structures.

Lord Grantchester, who was DFOB chairman at the time of its collapse, admitted to MPs last year that mistakes had been made.

The board had been “naïve” and paid too much for its acquisition of Associated Co-operative Creameries (ACC) from the Co-op in 2004, he said.

This included an unforeseen £1m bill for financial advice to avoid a £6m tax hit transferred at the last minute to ACC, Lord Granchester explained.

A subsequent report (pdf file) by managing receiver PricewaterhouseCoopers concluded that DFOB’s liquid division was a major factor in the company’s collapse.

The liquids division was ultimately loss-making and proved to be unsaleable as a business either before or during receivership.

But the report steered clear of blaming any individuals for DFOB’s collapse.

Instead, it pointed to a series of complex factors, including a £51.5m cash shortfall after considerable capital expenditure could not be recovered.