A DAIRY organisation’s financial collapse was described as a “devastating blow” to nearly 300 of the region’s farms supplying it with milk.

Milk co-operative Dairy Farmers of Britain (DFB) went into receivership on Thursday night, following trading losses and the inability to pay an economic milk price.

It was confirmed yesterday that its milk suppliers, including 288 farms in the North-East and North Yorkshire, would not be paid for last month’s deliveries.

DFB, which also runs a dairy in Blaydon, Gateshead, Wearside, employing 250 people, ran into trouble last year, suffering losses in its liquids division which led to it announcing the closure of two dairies, in Fole, Staffordshire, and Portsmouth, in November.

It was hoped that the move would return the division to profit, but it has since lost a contract to supply the Co-operative supermarket chain. It also lost members when its milk price became uncompetitive.

Last night, one North Yorkshire DFB supplier, who did not want to be named, said: “This is a devastating blow to all dairy farmers who dealt with them because it has happened so suddenly. There had been warning signs for a while that it might happen, but we have had no official news from the company at all.

“Farmers will be frantically trying to find someone to take their milk. Anyone who hasn’t made a contingency plan will be in big trouble. There aren’t that many firms collecting milk though, so people might struggle to find a buyer.”

The National Farmers’ Union yesterday expressed “bitter anger and dismay” at the news, which affects 1,800 farms nationally, who supply one billion litres of milk a year.

Gwyn Jones, the union’s dairy board chairman, said: “I am furious that farmers will not be paid for their milk, I know that many are desperately concerned about not finding a buyer. This cannot be allowed to happen.”

The NFU has agreed a system of immediate support and guidance for members and is talking to DFB, the receivers and other dairies to see what can be done.

Lyndon Edwards, chairman of the Royal Association of British Dairy Farmers, called on the receiver to clarify the situation as soon as possible.

He said: “The loss of last month’s milk cheque, coupled with their entire investment in the co-op is a massive financial blow to every individual concerned.

“Furthermore, DFB made it quite clear in its statement that there is no guarantee all future milk supplies will be collected and distributed.”

He urged other co-operatives and milk purchasers to take on DFB’s milk to fulfil future demands and ensure there is no sharp drop in milk supply.

Mr Edwards added: “We are also encouraging banks to be lenient on DFB members at this difficult time to ensure no further decline in farm numbers.”

Receiver Pricewaterhouse- Coopers LLP said it hoped to sell the DFB as a going concern.

Farms will be paid for milk supplied from when receivers took over.