FFA out to counter Arla bid for Express Dairies
FFA out to counter Arla bid for Express Dairies
By Robert Harris
FARMERS For Action leader, David Handley, is co-ordinating efforts to mount a bid for Express Dairies to counter the expected offer from Scandinavian co-op Arla.
He is urging UK milk producers to band together and claim a major stake in dairy processing.
"The government has said it wants farmers to take control of their own destiny. We should be looking very seriously at this," Mr Handley told farmers weekly.
Arla Foods, which is also the UKs fourth largest liquid milk supplier, is believed to be preparing a bid of 35p a share, which values Express at £105m, plus £200m of debt.
"It is disgusting that a British processing company is likely to be owned and controlled by European dairy farmers," said Mr Handley. "I have nothing against Arla, but a lot of people abroad are saying this is a British giveaway.
"I do not think 35p a share is the likely offer level, and Express has plans to reduce its debt dramatically. But even £300m, when spread among 20,000 dairy farmers, is not a lot for an asset which is going to take the British dairy industry forward," he said.
Mr Handley has discussed the move with Peter Ainsworth, shadow DEFRA secretary, this week. He described talks as "very positive". "We want Mr Ainsworth to highlight our intentions in the House, and to get an assurance that if we go ahead, we wont have the Competition Commission swarming all over us. This is not about creating unfair competition – it is about driving our industry forward rather than stagnating."
He also hopes to meet Lord Whitty, junior DEFRA minister, in the next few days. "When we talked in November, he said this sort of thing was exactly what farmers needed to do. And the recent Curry report agreed."
Mr Handley urged leaders of the big three co-ops – First Milk, Milk Link and Zenith, which represent about 10,000 milk producers – and big supply groups to discuss the move.
"British dairy farmers should grab this chance, or we will see them leaving the industry in droves."
lDavid Handley is keen to hear your views. He can be contacted on 07711-194947. *
UK dairy farmers should grab the chance to bid for Express Dairies, says David Handley.
Industry keeps a close watch
The industry is keeping a close watch on developments.
Alex Solomon, secretary of the Federation of Milk Groups, which represents co-ops and direct supply groups, said the federation was "broadly supportive" of any move that helped farmers move up the supply chain.
"This is in line with the recent policy commission report – that we need to see farmers get more involved in the industry. But it needs to be on a sound commercial basis. Whether Express is the right commercial vehicle is down to individuals to decide. We are always open to discuss issues in the dairy sector."
Co-op First Milk, which represents 4000 members, is watching developments "with interest", said a spokesman. "We are not clear what the proposals are, or who may be involved. Until we know that, it is impossible to have a firm view."
One analyst was more sceptical. "If Express cant make a go of their business, why do farmers think they can? Everyone, including some farmers, knows there is too much capacity in the liquid milk sector. Perhaps Mr Handley should approach Arla and say we wont make a bid if you allow farmers to become part of your co-op. At least that would make sure UK farmers would share the benefits."
Jonathan Ovens, chairman of Express Milk Partnership, said he was monitoring the situation. "Before I offered my support on behalf of 1200 farmer suppliers I would want to know more detail. We are certainly not going to be panicked into doing anything in a hurry."