Dairy Farmers of Britain is poised to buy milk processor Lincolnshire Co-operative Dairy.
DFB issued a short statement on Tuesday, saying: “Dairy Farmers of Britain confirms that it is in exclusive discussions with Lincolnshire Co-operative Society regarding the potential acquisition of Lincoln’s dairy business. The discussions are ongoing and no conclusions have yet been reached.”
A DFB spokesman denied it had released the statement in response to speculation a deal was imminent.
Last week, rumours circulated DFB was about to purchase Lincolnshire Co-op Dairy, as well as Birmingham-based Midlands Co-op Dairy. The speculation
was fuelled by reports that some farmer suppliers to the two dairies had approached other milk purchasers en masse in order to form contingency plans should the co-ops be bought by DFB. There were reports of one farmer touting around the milk supply of up to 80 farmers.
The reason for the farmers’ nerves was largely price-related. Former Associated Co-operative Creameries suppliers saw their price fall after the acquisition of the company by DFB last summer, and they also had to start paying a capital levy to help fund the acquisition.
It remains unclear whether DFB is planning to bid for Midlands Co-op Dairy, and the company refused to comment.
However, at the time of the ACC purchase, DFB described the move as “the first stage of its strategic development”.
It is understood that chief executive Malcolm Smith is keen to secure a stronger foothold in the liquid market.
Last week DFB announced an increase in its member milk price of 0.3ppl, and promised another rise on April 1, news that will please its members and possibly assuage the fears of any new suppliers.
Chris Walkland