Dairy giant Arla in merger talks with Milko

Swedish dairy firms Arla and Milko have announced that they are in discussions over the terms of a merger in a move taken as a result of Milko's parlous finances.

Dairy giant Arla in merger talks with Milko

“Milko has long had unbalanced finances and we have been forced to implement several, comprehensive cost-efficiency measures in recent years,” said Milko president Lars Reyier in a statement on Thursday.

Reyier continued to point out that the number of dairy cows in Sweden has almost halved since 1985.

“As elected officials, we have both a mission and a responsibility to search without reservation for modern structural alternatives within the dairy market which grants members the best possible sales and compensation for their milk,” he said.

Milko is owned by around 650 farmers in Sweden and they must approve of any proposed merger at an extraordinary general meeting.

Due to the dominant position of Milko and Arla on the Swedish dairy market, the approval of the Swedish Competition Authority (Konkurrensverket) will also probably be required.

Arla is already Sweden’s largest dairy and this position will be further strengthened by a merger with Milko.

The firms work together in Gothenburg already and Arla bought Milko’s dairy in Sundsvall earlier this year.

Milko’s operations are predominantly located in Värmland, Hälsingland, Dalarna, Jämtland and Ångermanland.

The company’s turnover was 2.2 billion kronor ($356 million) in 2010, but is a relatively small player in the Swedish dairy market in comparison to Arla, a global firm with 16,000 employees.

Arla has production in 13 countries, is owned by Swedish and Danish dairy farmers and posted a turnover of 59 billion kronor in 2010.

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Swedish dairy farmers in tractor blockade threat

Dairy farmers in Sweden are threatening to use their tractors to block all dairies in the country if the price of milk does not increase.

Swedish dairy farmers in tractor blockade threat

An agricultural turmoil is bubbling up in Sweden. During the last few months, there have been several reports of dairy farmers being forced to close down their farms due to the low price of milk and rising expenses.

Now, some of the farmers have had enough and are threatening to use their tractors to physically block Swedish diaries if the situation does not improve.

If the blockade becomes a reality, farmers would still milk their cows, but let the milk go to waste.

Stefan Gård, the president of lobbying organization Swedish Dairy Farmers (Svenska Mjölkbönder), explained that, at this point, the group does not back the threat to block the dairies.

“I fully understand why they are doing this. The situation is critical. You can’t leave a pot on the stove for too long before the top blows off,” he told the Local.

One of the enraged farmers is Anders Birgersson from Vikingstad, near Linköping in central Sweden.

“We need to raise the price of milk by 30 öre ($0.04) [per litre] to be able meet the market fair and square,” he told Sveriges Radio (SR).

The group hopes to bring together enough farmers for a demonstration at Jönköping, southern Sweden, to be able to put some weight into their threat to block all Swedish dairies.

On Thursday, Swedish Dairy Farmers plans to have a demonstration of its own in Stockholm.

During the demonstration the organization is going to hand over a document to Minister of Rural Affairs Eskil Erlandsson. The document will show the extent to which current laws and rules affect Swedish dairy farmers.

“At the moment, we are focusing on our own demonstration on Thursday. After that we don’t know what we will do,” Gård told The Local.

“The next step might be to join the blockade.”

Eric Johansson

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