Plans to close a Carmarthenshire dairy plant will place downward pressure on farmgate milk prices warned the Farmers' Union of Wales today.
The dairy plant in Newcastle Emlyn, West Wales, is owned by Saputo and manufactures cheese, milk, yogurt and other dairy products that are exported around the world.
The company said it was also closing another plant based in Heiden, Germany. Both the German and Welsh plant were bought by the company in 2006 and 2007 respectively.
The FUW said dairy farmers in one of the UK's most prolific milk producing sectors would feel the affect of downward pressure on farmgate milk prices.
"This surprise news will also have major consequences for milk producers in the area including those that supply the factory who, I understand, knew nothing beforehand that such a shock announcement was coming" said FUW Vice President Brian Walters.
Walters, who runs a dairy farm on the outskirts of Carmarthen, fears that if a buyer is not found for the factory more milk will be shipped many miles out of Wales to be turned into cheese or milk powder in the West Country.
"That doesn't make any sense at a time when consumers are increasingly seeking to buy more and more local food and drink.
"Closure of the factory will be a huge blow to the workers there and to its milk suppliers who will have to seek alternative buyers for their produce at such short notice.
"It will create downward pressure on the price they can expect to receive in the future."
A company spokesman for Saputo said: "The past few years have been a learning and challenging experience."
The firm's founder and chairman, Emanuele Saputo, told BBC Wales that the company had found the market for dairy products to be "marginal at best and highly competitive".
"We felt that the amount of time and energy it takes us to manage the business perhaps would be better utilised in other markets, where the margins are much more substantial."
NFU Cymru Deputy President Stephen James, a dairy farmer himself, said: "This news is undoubtedly a big blow to the area, as Saputo is a major employer in a very rural area of Wales. Our thoughts are with those whose jobs are at risk."
"This is a major worry for farmer suppliers of this company as they enter what will undoubtedly be a period of uncertainty for their business."
"Many will have been through difficult times previously with Dansco, stayed loyal to the plant and to the new owners, but will see this as a real kick in the teeth that after only a few years in Newcastle Emlyn Saputo looks like it is now pulling out, obviously leaving them in the difficult situation of finding a new purchaser for their milk."
With the potential loss of further processing capacity from one of the densest milk fields in Europe the NFU said it hoped that all efforts will be made to try to find a buyer for the plant.
Local assembly member Rhodri Glyn Thomas said he would be raising the matter with the Welsh government.
"Many farmers in west and south west Wales supply their goods to the plant."
"The importance of the site was widely recognised during the fight to secure the future of the former Dansco factory.
"It's imperative that all options are now explored to keep operations going and to keep workers in jobs - whether this is through finding a potential buyer or through a local co-operative model."
FUW milk and dairy produce committee chairman Dei Davies, of Holywell, Flintshire, said: "Every effort must be made by the Welsh Government to keep this crucial facility open so that workers in a very rural area with few job vacancies can remain in a job.
"In the meantime, I urge the Welsh Government to give as much support as possible to the work force and the milk producers affected by such a bitter blow.
"I sincerely hope it won’t lead to a drop in price for milk producers but closure of a facility so close to a large milk field is bound to add to future haulage costs."