Express Milk invests in ARLA

Dairy farmer supply group Express Milk Partnership (EMP) has bought a stake in its processing partner Arla Foods UK plc by implementing the capital raising powers of Express Milk Partnership Investments (EMPI).

The transaction is backed by the bank HSBC in the form of a loan that will be repaid by deductions of no more than 0.5ppl from EMP members' monthly milk cheques.

The investment is considered sufficiently sound not to require any underwritten guarantee from EMP members and is seen as a further strengthening of the group's relationship with its long-term processing partner.

"EMP members have a 7-year evergreen contract and a minimum price guarantee with one of the leading players in the high value liquid milk sector, so are already as secure as any dairy farmer in this country," said EMP chairman Jonathan Ovens.

"Taking a significant stake in our processing partner Arla is another step on in terms of business security and is a clear indication to all parties just how strong our commitment is to this industry and to the value added liquid milk market.

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"With all the uncertainty over the impact of CAP reform, I am more confident than ever that this form of integration with the right processor is the only form of co-operation that can guarantee a future for dairy farmers."

EMPI was established in 2002 to give the group a potential capital raising structure in the event of any suitable investment opportunity arising. The decision to invest in Arla Foods UK plc was made following a meeting of EMPI's democratically elected producer directors and district chairman on 10 February 2004.