Dairy Farmers of Britain plans to axe more than a quarter of its headcount in a major restructuring programme to return the business to profitability.

The troubled dairy co-operative announced this week that its restructuring plan could result in the loss of up to 640 of its 2,200 workforce. Redundancies would be across the business and include corporate office staff in Nantwich and Blaydon, it said.

The restructuring, which the company said would reduce fixed costs, includes the creation of two autonomously managed divisions, for liquid milk, and milk supply and cheese.

The company's underperforming dairies in Fole and Portsmouth have been earmarked for closure, while distribution depots in Portsmouth, Cheshunt, Leeds and Lincoln will be rationalised.

In a further blow to DFB members, the company said it would reduce the price paid to farmers by 2ppl, backdated to 1 November. This puts its standard milk price at 23.5ppl, well below the average paid by competitors.

The price cut came on the back of a fall in cream prices combined with high input and energy costs, the company said. Doorstep volumes had also fallen.

However, DFB would not look kindly on farmers who walked away from their contracts, chief executive Andrew Cooksey told The Grocer. "We will take a very strong line with anyone who steps away from their responsibilities," he said.

Cooksey strongly rejected suggestions the company's future could be in jeopardy and insisted retail customers supported its restructuring plans. "We have to reduce costs in this current market and are only doing what every professional business is doing," he said. "This difficult but decisive action safeguards the business moving forward and is therefore in the best interests of our wider business, our members and our employees."

The moves continue a turbulent period for DFB following the cancellation of a members' interest payment and the departures of several senior figures.