FIRST MILK has been criticised by the National Farmers' Union in Scotland, which claims it is showing a lack of commitment to outlying milk producers. It is said the positive progress detailed in First Milk's annual report and accounts was achieved via a strategic shift away from the small scale speciality cheeses that once underpinned remote milk fields.

The farmer-owned dairy co-op’s financial round-up for the year ending March 31, 2019, showed that it was delivering across the key financial areas of turnover, operating profit and cash generation, resulting in what it described as a further strengthening of its balance sheet.

However, NFU Scotland milk committee chairman John Smith, a First Milk supplier from Kintyre said he was disappointed that the board’s strategy had moved away from small-scale production. He said: “After some dark times for the members of this farmer-owned business, First Milk has made year on year progress under Shelagh Hancock and her team.

“It is a strategy that has seen them investing in more efficient and increased capacity, following through with a more competitive milk price for its members along with a loyalty payment linked to shareholding,” he added. “They have delivered a net profit in line with expectations of £2.6 million coupled to a net debt reduction of £3.8m.

“That progress has focussed on building key relationships with the likes of Ornua for cheese and a new strategic partnership with Havero Hoogwegt for whey proteins as well as continuing to develop existing relationships with customers.

“However, the deeply disappointing closure of the creamery on Arran along with the ongoing uncertainty around the creamery at Campbeltown underlines that the First Milk board strategy has shifted away from relatively small scale speciality cheeses to heavily invested, industrial scale modern creameries aligned to key marketing partners. That strategy exposes the vulnerability of First Milk members in remote milk fields like Kintyre and Arran.

“The sad inability to find a buyer for the Arran Creamery shows the harsh market reality that the food industry faces. The hope remains that something can be achieved for the future of the Campbeltown creamery which has the support of First Milk, the Scottish Government and the local farmers.”

The First Mike accounts show that group turnover increased 7.8% to £272.3m, with an operating profit for the year stable at 2.6% of turnover. Net debt was down by £3.8m year on year, while net assets had increased by £4.4m by year-end.

Commenting on the results, First Milk chief executive Shelagh Hancock said: “Over the last 12 months we have been focused on further strengthening and developing the business, with stable financial performance, efficient manufacturing, strengthened commercial relationships and, crucially, improved returns to members.

“With a strong platform in place, we are committed to maximising the value we return to our members.

"We remain clear that prosperity comes from building demand, growing capacity and securing supply – in that order.

"The dairy world is changing fast; economically, socially, technologically and politically. We will continue to be agile and adaptable, broadening our base and collaborating to deliver optimal supply chain solutions that deliver benefit for our members and our customers.”

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