Arla buys into Westbury joint venture
First Milk and Milk Link agreed to sell a minority share in Westbury in order to make room for Arla in the joint venture, which is based in Wiltshire, the UK.
The Westbury operation consists of a skimmed milk powder and bulk butter production facility that serves a balancing function for the owners, processing excess milk at peak production times.
Promise of lower costs
For First Milk and Milk Link, having Arla on board will help reduce the shared cost of Westbury. At present the site imposes high operational costs per unit on the two original shareholders.
A Westbury spokesperson explained: “At certain times of the year, such as the spring flush, the facility is very busy but at other times activity is minimal resulting in the site’s overall operational costs per unit being high.
“Today’s announcement of our partnership with Arla we believe will help address this.”
By giving Arla access to the capacity at Westbury, First Milk and Milk Link hope to improve the margins of the joint venture.
In addition, all three shareholders intend to develop the Westbury site beyond its existing skimmed milk powder and bulk butter production capabilities in order to make it more economically valuable throughout the year.
Meets Arla’s balancing needs
For Arla, involvement in the Westbury venture will also provide the processor with valuable balancing facilities.
Peter Lauritzen, CEO of Arla Foods, said: “This joint venture with Milk Link and First Milk in Westbury Dairies will give us access to the high quality balancing facilities which we require, following the closure of our Northallerton creamery.”
An Arla spokesperson added that following the closure of the Northallerton creamery in May the company no longer had access to drying facilities. The company moved its cream production to Stourton but the facility does not have a dryer which is needed to produce skimmed milk powder.
Buying into the Westbury joint venture gives Arla the capacity to produce skimmed milk powder and therefore cope with peak production periods. The spokesperson added that the Westbury facility gives the company enough capacity to meet its current balancing needs.
