It is estimated that the build cost of phase one of United Milk’s new development will be in the region of £40-45m, of which half is to cover the cost of equipment. From a detailed trawl of over 20 suitable sites across the entire membership milk supply field, United Milk has identified one preferred site of over 30 acres in size and is currently in advanced negotiations with the site owner. Subject to concluding these negotiations, and to no unforeseen planning or building issues arising, it is anticipated that the project could be operational on this site by the fourth quarter of 2001.
To generate the necessary funds, United Milk will be issuing shares in the new business, to be offered to existing members and prospective members. It is intended that the balance will be funded by banks and asset financing companies once the fund-raising exercise is successful.
For a one-off investment to buy capacity in the new plant (Premium Price Capacity), the United Milk member is guaranteed an ‘evergreen’ milk supply contract with no supply limit imposed; a guaranteed minimum price premium over IMPE (intervention milk price equivalent) for a standard litre of milk; plus, in the medium to longer term, the possibility of dividend income when the profits and needs of the business permit.
“No one can possibly deny that the time has come to move on and strike a better deal for UK dairy farmers,” concluded Richard Ashworth. “Producing milk in a country which is less than 90 per cent self sufficient in dairy products, UK dairy farmers are faced with exciting times of great opportunity – providing they make the right decisions.”
“The undeniable challenge that lies ahead for us is to persuade our members – and other dairy farmers – to abandon for good their ‘go it alone attitude’ and to follow the example of farmers in many parts of the world who have pooled their resources to invest in their own processing facilities.”
“We now need a firm mandate and support from producers to set about the necessary action. We need them to embrace and seize this most positive and promising opportunity afforded by our processing and manufacturing plans, and to raise sufficient capital to make the business a commercial reality.”
“Farmer-shareholders will be entitled to expect a fair return from our new business. Likewise, it is important for members to accept that if they want it to succeed, they will have to show faith and invest in its future.”
Details of reports from Food Industry News click here
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