Milk Link strategy proves a hit

A POLICY of focussing on adding value and making strategic acquisitions appears to be paying off for Milk Link – the UK‘s leading farmer-owned dairy business.

Annual results just published show that turnover before acquisitions was up 15% to £388m, while operating profits were 41% higher at £11m, before interest and tax.

For the company‘s 2500 dairy farmer members, milk price was also up by over 7% on the year.

“Over the past year we have made excellent progress in transforming the co-operative into a vertically integrated dairy business,” said Milk Link chairman Jeremy Pope.

Processing capacity was raised to around 1bn litres, through the acquisitions of Newlands Farm in Cornwall, Peninsula Milk Processors in Devon and a 20% share in Westbury Dairies.

The more recent acquisition of The Cheese Company, the UK‘s second largest cheese maker, has lifted total capacity to 1.6bn – over 10% of UK supplies.

The company‘s product mix has benefited accordingly, with the launch of Milk Link‘s own brand of long-life milk, Moo, and the production of Nesquik Fresh, under license from Nesquik.

These developments helped the company earn an extra 0.74p/litre on processing milk compared with drinking milk sales.

But Mr Pope warned of uncertainties ahead.

“The entire industry is exposed to the impact of the Mid-Term Review and increased competition among processors and retailers.

“We must continue to focus on the value of milk in product form and not as a raw material.”

As well as introducing a free advice service to dairy farmers, the company has also introduced “Milk Link Finance”, with over £1m available to members to fund infrastructure projects.