European dairy processors DMK and Arla Foods are looking at plans to work together on milk powder production.
The companies, which in March announced plans to form a whey processing venture, said on Monday (29 August) they could look to build a milk powder plant in northern Germany.
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DMK CEO Dr. Josef Schwaiger said the end of EU quotas on dairy production in 2015 meant the company’s milk output would increase. He said the co-operative, formed through last year’s merger between Nordmilch and Humana Milchindustrie, needed to look at how it would process the extra production.
“After 2015, the rate of increase will exceed the 1% annual increase of past years. We must evaluate the possibility of cooperating and thus processing these additional amounts more cost-efficiently, as well as expanding the existing processing capacities,” Dr Schwaiger said. “We are very serious about our goal to market our shareholders’ milk in the most profitable way in order to generate an above-average payout.”
Demand for dairy products is growing in many developing countries and the end of the EU quotas could provide processors in Europe an opportunity to serve manufacturers and consumers in emerging markets.
Arla CEO Peder Tuborgh said: “Our goal is to create a platform from which we can supply the expected growing demand for dairy products worldwide, especially in emerging markets. This is a big investment and by building this plant together we can work more efficiently and minimise the risk of the two companies.”
DMK and Arla have set up a “task force to develop a business case for the joint manufacture of milk powder”. The companies have yet to decide whether to go ahead with the venture.
