Dairy Crest Group has retained its contract to supply milk to UK supermarket Morrisons for the next three years, but purchase volumes will be reduced by a third from March.
Dairy Crest, Britain's largest dairy food company, which is selling its dairies operations to a unit of German food group Müller as it battles low milk prices and shifts its focus to cheese and spreads, does not expect the reduced purchase volumes to materially affect its full-year results.
Dairy Crest is in the middle of selling its dairies operations to German food group Müller as it battles low milk prices and shifts its focus to cheese and spreads.
Morrisons, the UK's fourth largest grocer said that it already has an existing relationship with the farmer-owned cooperative, Arla Foods, for liquid milk but a new agreement guarantees increased volumes.
"Arla has just opened what is understood to be the most efficient milk processing plant in the world in Aylesbury, where the retailer’s fresh milk is processed and Morrisons believes that this investment in the British dairy industry will lead to stronger returns for Arla farmers in the long term," said the company in a statement.
It added, "Morrisons also has an existing relationship with Dairy Crest and although it will be reducing volumes for liquid milk, the processor will continue to supply Morrisons with high volumes of other dairy products including cheese, butter and soft spreads."
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