The UK subsidiary of Swedish dairy giant Arla Foods has unveiled a £10m (US$18.4m) investment in a new milk processing plant in Scotland.

This is a joint venture operation between Arla and its strategic alliance partner, Milk Link, expanding the utilisation of Milk Link’s existing cheese factory site. For Arla’s initial processing contract with Asda, Scottish milk will be sourced for Lockerbie from Sorn Milk, a member of Arla Foods Milk Partnership.

Neil Davidson, Chief Executive of Arla Foods UK plc said: “The new hi-tech dairy will employ approximately 100 people and will be capable of processing around 150 million litres of fresh milk a year.

“The development will considerably strengthen our position in the Scottish market place, enabling us to supply all our major supermarkets and other customers throughout Scotland from Lockerbie in the South and Claymore Dairies (Nairn) in the North. This will increase farmer, customer and consumer choice throughout Scotland.”

The move is controversial as the new plant will be just miles away from rival Robert Wiseman. Arla is setting up the new plant in Lockerbie to supply Asda following a deal reached with the retailer valued at around £180m per year.

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Wiseman is the leading milk company in Scotland. It is majority-owned by the Wiseman family and is run from the former family home near Glasgow. In May, Wiseman’s shares tumbled 17pc after it lost the Asda contract, worth £70m a year.