First Milk to sell Scottish processing business

Scottish First Milk producers have been left shell-shocked after the processor announced its intention to sell its Arran and Campbeltown creameries following a strategic review of the business.

The processor is seeking buyers for the two sites which supply the Isle of Arran and Mull of Kintyre brands respectively, but it is understood there will be no immediate changes for First Milk suppliers.

See also: UK dairy has highest processing investment in EU

Last month First Milk harmonised its four milk pools into a single price, so Scottish members would not see prices change disproportionately to members in England and Wales.

However, Farmers Weekly understands a prospective deal for the creameries could include producers supplying the creameries in the future.

Strategic review

“Following a strategic review, we have determined our branded consumer-facing businesses in Campbeltown and on Arran are not a strategic fit for First Milk moving forward,” said First Milk CEO, Shelagh Hancock.

Ms Hancock added the review did identify markets for the premium Mull of Kintyre and Isle of Arran brands, but First Milk was not prepared to deliver the significant investment necessary to capture these opportunities.

“However, we are confident with the right focus and investment under new ownership the businesses would prosper,” she added.

“A sale would enable us to continue with our focus on developing our major creameries in Haverfordwest and the Lake District, creating value through broadening and strengthening our strategic partnerships and delivering best value for our members’ investment.”

The two creameries would continue to run as normal during this sale process First Milk said they would work closely with buyers to ensure a smooth transition.

“We appreciate this decision will affect some of our colleagues, but we hope that under new ownership the sites will thrive, offering good employment prospects for the future,” said Ms Hancock.

Producer reaction

John Smith, First Milk producer and NFU Scotland milk committee chairman

“While producers supplying these creameries are shell-shocked at the announcement, the most important thing to keep in mind is that, in Mull of Kintyre and Arran cheddar, both creameries are making world-famous; award-winning high-quality cheese and both sites should be hugely attractive to potential buyers.

“In the short-term however, farmers supplying these creameries will be frustrated, justifiably worried but not completely surprised by the announcement.

“They have built their businesses with a view to continuing to milk cows and have stuck with First Milk through thick and thin.  

“However, these are local, family farms who have also successfully invested in building and promoting their brand locally and nationally and we must now look to the future.

“There are no other milk buyers operating in these remote milk fields but they are very productive, producing high-quality, grass-fed milk so the focus is now firmly on building a plan and attracting potential buyers into the area to view the plants.  

“For a relatively small investment, potential buyers or partners have an opportunity to take the Kintyre and Arran brands into higher value specialist markets backed by a story with real provenance and great tasting cheese.

NFU Scotland has already spoken to Argyll and Bute Council, Scottish government and Scottish Agricultural Organisation Society regarding the announcement and the next steps will be discussed at a meeting of producers, being scheduled for next week.”

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