The Dutch dairy company, which will relocate operations to its dairy plant in the north of the country, blamed growing price pressure from foreign competitors and an increase in local Hungarian retail brands for the closure.

Rob Van Dongen, of Friesland, told FoodandDrinkEurope.com "Since Hungary became part of the EU the market situation has changed. There is more competition from foreign companies, putting price pressure on products which effects the cost price of our products."

The changes left Friesland struggling to compete with rivals whilst bearing the operating costs of two plants.

Friesland's 2004 sales in Hungary, where its operations control almost a quarter of the market, were worth almost HUF60 billion (€235m).

The company has also spent more than HUF3.5 billion on developing its dairies in Hungary over the last three years.

And in 2004 it bought nearly 350m litres of milk from Hungarian producers.

The firm said the closure would not affect the company's output and would only incur minimal costs.

Van Dongen confirmed that the Békéscsaba plant will close on 1 March 2006 resulting in 116 job losses.