Co-op opts to withdraw from dairy
week decided to withdraw from the dairy farming industry. The group
has said that the move will give it the opportunity to concentrate
on arable, fruit and vegetable production.
The UK's Co-operative Group's farming business, Farmcare, has this week decided to withdraw from the dairy farming industry. The group has said that the move will give it the opportunity to concentrate on arable, fruit and vegetable production.
Farmcare currently produces 20 million litres a milk a year at four UK locations, but plans for expansion have gone sour since the recent Common Agricultural Policy (CAP) reforms have been implemented, the group claims
The group fears that the CAP reforms will drive milk prices down in the UK and make subsidy payments a crucial part of its business.
This has resulted in the company entering a 30-day consultation period drawing up a closure programme for the four sites. The decision, which will cause 48 job losses in the sector, will allow Farmcare to become more focused on its strategy to become less dependent on subsidy payments and prioritise investment, and allows it to "focus on areas that are likely to give the best returns", said Christine Tacon, Farmcare's general manager.
The decision was made with regret but has "strategic business necessity" she claims." In the last two years we have been very successful in adding value to the crops we produce by ensuring we have a buyer from them before they are sown. As a large commercial farming business we have been able to take benefit from economies of scale, whether satisfying large retail contracts or sharing machinery", Tacon added.
"The Co-operative Group needs to make a return both from the land assets it owns, as well as the goods it produces. Many dairy farmers are family owned and do not pay rent, and although Farmcare dairy's performance is technically excellent, it has to have significant economies of scale to compete with family farms."
Farmcare is a leading UK producer of arable, vegetable and fruit crops. The group said that it has an extensive role in estate management on behalf of private landowners and it manages 85,000 acres of farmland in the UK.
It is looking for further business development opportunities, and is taking a share in Panda, the Lichfield-based potato packing business. Farmcare has said that it plans to make every effort to find alternative employment for those affected by the decision.
