Arla Foods plans Caribbean milk production

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European dairy giant Arla Foods is considering acquiring a diary
plant in the Dominican Republic. The company is thought to want to
start production of powdered milk there - Arla currently supplies
the Dominican market via exports - as well as beginning UHT milk
production, writes Danny Vincent.

Arla Foods supervisory board is currently considering the proposal to acquire Mejia Acala, prompted by the Caribbean company's current financial problems.

Arla has been exporting Milex milk powder to the Dominican Republic for over 50 years and originally planned to set up its own plant to produce and distribute milk throughout the island.

"Consumers in the Dominican Republic know Milex as a healthy and tasty product and we believe there are good opportunities for exploiting the Milex brand in other product categories - initially for UHT milk",​ explained the company's divisional director Peter Lauritzen.

The production of long-life milk will begin in the summer if Arla's board gives the project the go ahead.

David Cueto, director of the Dominican National Council for the regulation and Development of the milk industry, has welcomed Arla's move: "The Danish-Swedish brand Milex is the largest in the market and Dominican milk producers can benefit from this."

But the possibility of Arla taking advantage of some Acala's financial woes to acquire the company has been seized upon by one organisation as further evidence of European dairies exploiting their counterparts in the developing world.

According to Cafod, the Catholic agency for overseas development, an estimated 10,000 farmers in the developing world have been put out of business in the last 20 years as a result of European export subsidies which encourage producers to sell large quantities of milk products in overseas markets at a substantial discount to market prices.

Arla Foods exports in the region of €63 million worth of dairy products to the Dominican Republic each year, and the export subsidies the company receives allow it to sell them at around 25 per cent less than locally produced dairy products.

Related topics: Markets, Arla Foods, Fresh Milk