Some industry commentators have predicted that Britain's co-op share of the dairy market will be heading for 70% in the next 10 years.
Though still lagging behind their rivals on the continent, in New Zealand and even in Northern Ireland ­ where United Dairy Farmers handles 70-80% of the liquid market ­ GB groups are reckoned to hold 50% of the liquid market and 10% of processing capacity. This may mark an increasing disenchantment with the trade among primary producers in the face of a highly volatile market. But it also marks growing maturation of the co-op sector, a trend underlined in the Curry report.
Two of the leading contenders used Britain's premium farm show, the English Royal in Warwickshire in July, as the public launching pad for their latest ventures.
Milk Link, the £300m a year group which emerged in the south and south west in the wake of the demise of Milk Marque, announced a £30m part-acquisition, part-joint venture deal with Express Dairies.
This made it Britain's fourth largest integrated dairy business with the capacity to process 50% of the 1.4 million litres of milk a year from 2,7000 farmer members.
"Most advanced dairy industries round the world are farmer-owned, vertically-integrated businesses, and I think co-ops in this country will grow and increasingly process farmers' own milk," says chief executive Barry Nicholls. "Milk is a unique raw material. You can't alter its supply very easily and it has to be used within 24 hours. So it is logical that more and more producers should get more and more involved with processing, either through wholly-owned assets or joint ventures and partnerships with existing processors."
Nicholls accepts the need to retain the commodity manufacturing sector to balance out production peaks and troughs will continue, but wants further expansion in added value, long-life and extended shelf life products and ingredients.
Strongly rivalling Milk Link for media attention, Dairy Farmers of Britain ­ formed by the merger of former Milk Marque northern satellite Zenith Milk and the Milk Group ­ has embarked on a major cash raising programme with a target of £140m.
Chief executive Chris Bird says: "Successful Continental models show that self-financing is crucial to the future of dairy farmer co-ops to ensure the substantial, large scale processing investment required to defend and improve future milk prices."
Response from the 4,000 producer members of the £450m group has been favourable, but the group, which handles two billion litres a year, is remaining coy on its eventual target. "We are already investigating a number of processing opportunities," was all chairman David Stern would say. "Capital on this scale, when invested in the right opportunities, will enable us to improve efficiencies, reduce costs and, most importantly, increase the profits generated."
Meanwhile, United Milk is rapidly heading towards 100% capacity with its 850 million litre a year capacity processing plant recently brought into commission at Westbury, Wiltshire at a cost of over £50m. Half of the milk, which is processed into butter and skim milk powder, comes from its own 450 members, with much of the remainder bought in from other co-ops.
Not to be outdone, First Milk, which is due to reveal its first annual reports shortly after its formation from the Axis arm of the Milk Marque and Scottish Milk, is also beefing up its processing capacity with the acquisition for £6m of 20% of the Dairy Crest plant at Haverfordwest in Wales.
If enthusiasm for vertical integration is at an all time high, however, the collapse of farmer co-op Amelca's processing venture serves as a harsh reminder that taking further control down the supply chain is no guarantee of success.
As one processing source says: "You might secure a market for your members' milk, but you've still got to sell it to retailers at the market price.
"As a new entrant to a market like this, you've got to buy your way in."