Dairy processor First Milk has announced the closure of its Isle of Arran creamery in Scotland, with the potential loss of five jobs.
The processor has also announced that it is scaling back operations at the nearby Campeltown creamery in Kintyre, while negotiations over a potential farmer buyout continue.
Both sites were put up for sale in April 2018 after First Milk decided they were no longer core to its business strategy.
However, all efforts to sell the Arran site, at Torrylinn on the Isle of Arran, have failed.
“As a result, First Milk has today commenced employee consultation about its proposed intention to close the Arran Creamery,” a company statement said.
The closure means the two farmer-suppliers based on the island will retire from milk production.
A First Milk spokesman told Farmers Weekly: “Because of the economic and practical reality of transporting milk off the island of Arran, we have worked closely with the two farmer members there, who have agreed to retire from milk production in the coming months.”
Meanwhile, First Milk will continue its negotiations with the 30 farmer-suppliers of the Campbeltown creamery with the active involvement of the Scottish Government.
“The discussions will hopefully conclude with the Campbeltown Creamery being owned by local farmers.
“It is envisaged that the farmers will form a new co-operative, which will operate the creamery independently of First Milk,” the company said.
In anticipation of the change to new ownership, a consultation with 11 colleagues had begin at Campbeltown about proposals to scale down the operation, said the company.
The spokesman explained that scaling down meant cutting the number of days of operation each week and reducing the plant’s output.
He also outlined what would happen to the 30 farmer-suppliers if negotiations broke down.
“First Milk will provide transitional services in relation to milk balancing for an agreed period.
“If the proposals do not proceed for whatever reason, then the producers on Kintyre will remain members of First Milk and their milk will continue to be collected as normal,” the spokesman said.
James Barbour, chairman of the Kintyre milk producers working group, which is negotiating the Campbeltown buyout, acknowledged First Milk’s efforts to secure the creamery’s future.
“First Milk has worked hard to secure a sustainable future for the Campbeltown creamery over the past 12 months but it has not been possible to secure an external buyer,” Mr Barbour said.
“Yet, we believe that it is important to retain processing capacity on Kintyre for the long-term security of the dairy farmers here.
“As a result, we are working together to try to secure the site for the future, although there is still considerable work to do to bring this to a conclusion,” he said.
NFU Scotland milk committee chairman John Smith added: “The news coming out of Arran and Campbeltown is extremely disappointing, especially for the staff and dairy farmers who will be affected by the decision.
“There has been a cloud of doubt hanging over both factories for the past 15 months, since First Milk announced its intention to offload the creameries in April 2018, and this decision is unfortunately the outcome.”
Mr Smith sympathised with the workers and farmers directly affected.
“Being a dairy farmer from Campbeltown, I am well aware of the implications this announcement will have on the dairy supply chain and the wider community,” Mr Smith said.
“The lack of dairy processing in Scotland is a serious concern for our industry, especially with the uncertainty of Brexit looming, and loses like these only make the dairy supply chain that little bit more vulnerable.
“Despite the scaling down of production in Campbeltown, we welcome the news that First Milk has confirmed it is in discussions with local Kintyre farming members.
“It is vital that both milk and cheese productions continue in an area that plays a vital role in the dairy sector in Scotland.”