In his first major interview since joining the company in October, Mustoe told The Grocer that a number of steps had been taken to improve the fortunes of the farmer-owned co-op, which posted a £10m pre-tax loss and a 3% fall in turnover to £582m in its most recent results, for the year to 31 March 2009.
Mustoe said he had implemented a series of 30, 60 and 90-day plans to address cost, sales and distribution issues. First Milk also cashed in £18.8m of shares in Robert Wiseman Dairies last month, earmarking the money for the loss-making cheese division.
"We are doing an awful lot to improve our trading position," said Mustoe. "We must improve the quality and sustainability of our earnings. Normally you get one or two years to do this, but we must run faster."
He revealed he had already met 700 of the co-op's 2,500 farmers since joining and described their mood as "angry" at First Milk's 4.25ppl farmgate milk price cut over the past year.
"With normal shareholders, if the dividend goes down it's not life-changing, but if the milk price goes down it plays with members' lives," he said. "They were concerned not enough was being done to improve the business. We were off the pace as far as they were concerned and there are some very raw nerves around."
Extra scrutiny was being put on the co-operative production model since the collapse of Dairy Farmers of Britain, Mustoe conceded. But First Milk's balance sheet was strong, he said, with £60m of net assets and a £35m stake still retained in Wiseman.
Although he did not rule out a resurrection of merger talks with Milk Link, which collapsed in early 2008, Mustoe said other issues were more pressing. "We have a lot of work to do internally to get ourselves in a stronger position before we think about things like that."