Arla foods announced on Wednesday (31st July) that it plans to close its processing plant at Ashby de la Zouch, Leicestershire, threatening the jobs of the plant's 370 employees.

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The farmer-owned Danish processor said it plans to move to a new site in Aylesbury, Buckinghamshire, where a one billion litre fresh milk processing facility is being built. The company had previously denied speculation that it would close its other processing plants when the new Aylesbury site came online.

Arla said it expects to close the plant at Ashby de la Zouch by April 2014, but that milk volume would be gradually transferred over from the Leicester plant to the new Aylesbury facility from October 2013. The company said it would help workers affected by the closure find employment elsewhere within the company or with others, and added that it had been in consultation with workers and their trade union representatives.

Reps from trade union Usdaw, which represents workers at the Leicestershire plant, said the move was "devastating," but added that they hoped to avoid job losses or at least develop contingency plans through consultation with Arla.  

Arla said milk will continue to be collected from farms supplying the dairy and be delivered to its other processing sites, but that it may outsource its distribution function to a third party.

Commenting on the announcement, Lars Dalsgaard, head of Arla UK's supply chain, said the new efficiencies delivered by the Aylesbury dairy would enable the company to deliver the highest possible returns to its farmers.  Arla also claims its new facility will be zero carbon, feeding into its "sustainability agenda."

Arla plants were targeted last week by protestors coordinated by direct action group Farmers for Action, which believes the company's refusal to negotiate on price is holding back price increases across the dairy sector. Over the weekend, the group blockaded an Arla depot in West Yorkshire.

In a joint statement, Arla's board directors, farmer board representatives and Milk Partnership farmer board members responded, "We question the motive of the farmers who are protesting against a farmer owned business.  Their actions are preventing a farmer-owned cooperative from going about its legal, daily, business and from collecting its farmers' milk, through blocking vehicle movements into and out of the dairies. 

"The protestors' actions are increasing costs at the site which, in turn, is financially damaging a business that is fully farmer owned and whose profits are returned to its farmer owners."

The various Arla board members added, "If Arla is not able to collect a farmers' milk, potentially, it is harming the livelihoods of these individual farmers because the company is not legally obliged to pay farmers for milk it is unable to collect."

Protesting farmers, however, remained defiant. They reiterated that higher commodity prices are not being passed back to producers and promised further action.