Medina Dairy’s plan to close its Watson’s processing plant in Hampshire could leave the liquid milk sector under capacity and in danger of failing to meet future demand, dairy consultancy Kite has warned.
With the sector’s recent financial difficulties leading to the closure of plants such as Müller’s Foston site last year, liquid milk processing was currently in the “high 90%” of total capacity, said Kite director John Allen.
The sector had coped with demand through the pandemic. But the combination of the planned closure of Watson’s Dairy and an expected increase in demand over autumn as some foodservice businesses came back online left the sector “in the balance”, said Allen – who warned last year that more investment in capacity was needed to safeguard the future of UK milk production.
“I don’t see much call for that investment now that we have a recession on the way. But if demand increases this autumn, processors will have to keep running almost at full capacity,” he added.
“And if they encounter any problems from a breakdown or bad weather we could then end up with the supply chain not working.”
This could ultimately lead to a prolonging of the SKU simplification seen during lockdown or even price rises in the mults amid tighter supplies of milk, he warned.