In a throwback to the bad old days, a major schism has opened up between the two dominant forces in the dairy industry.

When Dairy UK decided to replace independent chairman David Curry MP with Dairy Crest CEO Mark Allen last week, it might not have expected the NFU to react quite so furiously. But the union, claiming the integrity of Dairy UK had been critically undermined, withdrew its representative, Dairy Board chairman Gwyn Jones, from the board.

Then again, it’s not the first time the NFU has thrown its toys out of the pram. The dairy industry is one of the most fragmented and politically charged sectors of UK production, with farmers, processors and retailers often sitting uneasily side-by-side and appearing to be focused on differing agendas. It’s a shame, because collaboration in dairy is widely regarded to have improved since Dairy UK was formed four years ago with the intention of uniting the industry.

So how will the fallout from the split affect Dairy UK’s ability to meet its goals? Does the NFU’s absence mean its ability to represent the full supply chain is diluted? The NFU thinks so. In a strongly worded statement, the union claimed the “naive and short-sighted” move meant Dairy UK now only represented processors and could no longer claim to take farmers’ views into account.

Curry believes Dairy UK has only been damaged for the short term, although he did cast doubt over the experience of Allen, who took over as Dairy Crest boss in January 2007, for the role. “Mark will be a perfectly good chairman but he’s only been on the board a year,” he says.

Headhunted for the job three years ago, Curry claims Dairy UK offered him no explanation as to why he was being replaced. Indeed, he only found he was to be ousted when Allen flew to meet him on holiday in Bordeaux, leading to accusations that Dairy UK’s processor board members had been secretly planning to oust him for a while.

“A small number of people decided they wanted David Curry out, which left us in an untenable position,” says Gwyn Jones. “They clearly thought he was too close to the farmers. Dairy UK has all been a pretence at trying to bring the industry together but at least we know where we stand now,” he adds. “This is business. You can’t expect someone buying from you to do you any favours. Farmers have to look after themselves.”

Dairy UK director general Jim Begg sees it differently. He points out that most industry bodies would have an industry representative heading its board, and that the continued use of an independent chairman no longer reflected the needs of an evolving supply chain. Besides, adds Begg, there is nothing in the organisation’s constitution guaranteeing an independent chairman, despite NFU protestations to the contrary.

“Our objective was always to move to having an industry chairman as quickly as possible,” he explains. “Having an independent chairman suggests there is a problem.”

Regardless of who is in charge, the organisation will continue to promote farmers’ agendas, he argues, with Jones set to be replaced by a farmer representative put forward by the Dairy Farmers’ Forum. Can the rift be healed? The NFU indicated it would reconsider its position if Dairy UK reversed its policy and reinstated an independent chair. However it is also clear that Dairy UK is equally unimpressed with what it sees as an overreaction.

“The NFU has to sit back and think about this,” says Begg. “I hope it will dwell on this strategy of walking away.” A month ago all elements of the dairy supply chain appeared to be working together to bring sustainability to the sector. Now though, with Tesco having been accused of firing the opening salvo in a new milk price war with its rollout of Fresh ‘n’ Lo, and Dairy UK’s relationship with the NFU having collapsed, it seems the old battlelines between farmer, processor and retailer are as visible as ever.