DENMARK/UK – Southern Milk Co-op has announced it is to disband from the end of March, blaming market pressures from co-op competitiveness and Arla’s merger with Express Dairies.

The announcement jeopardises the future of Southern Milk’s 55 members, although Dairy Farmers of Britain said it was likely to take many of them on board.

Arla has also made moves to recruit the Southern Milk members, who supply about 85 million litres of milk a year.

Southern Milk’s announcement may raise eyebrows in the industry, as Arla’s merger with Express was in doubt until the 11th hour. UK and European bodies feared it would give Arla Foods an unfair monopoly in the sector, forcing smaller companies out of business.

Arla Foods UK now has a 25% share of the UK dairy market.

There are also fears that the company could be abusing its strong position in Denmark, where it receives just short of 93% of all milk deliveries.

An official enquiry is currently being held into one incident in which Hirtshals Andelsmejeri, Denmark’s sixth largest dairy, lost its supply contract to the Dansk Supermarkets chain.

It is claimed that pressure from Arla, which is offering a new line of drinking milk that is 16% cheaper than the standard milk price, led to the contract being given to Arla.

A spokesman for the private dairies association Henning Mortensen said that Arla’s cheaper milk had been introduced as a combat measure against supermarket chain Aldi, which had been selling its Maelhb