UK – Arla Food has admitted that it may be forced to close two of its dairies, which would result in over 400 job losses.

In its latest trading update, the company said that the Ruislip dairy, London and the Newcastle-upon-Tyne plant are likely to close in May 2005.

This follows the closure of its old Leeds dairy, which has been replaced by the Sourton, Leeds fresh milk dairy, which has begun commercial production.

The company also played down the fact it had lost the right to supply around half of supermarket chain Sainsbury’s milk, which has been compensated for by the fact that it won the exclusive right to supply milk to Asda three months ago.

It said that all these changes in supply contracts and changes in farmer supply businesses accelerated by the impact of CAP reform would create short-term uncertainty, but that it is “well placed to benefit from this process in the medium term”.