London, Sept 25 - Britain's largest dairy farmer co-operative reported a loss for the 2008/09 financial year on Friday and said it had dipped into reserves to shelter members from a market downturn.
First Milk, based in Paisley, Scotland, reported an after-tax loss of 7.1 million pounds ($11.6 million) for the year ended March 31, with group turnover declining by three percent to 582 million pounds.
The company cited a decrease in returns for milk powder, cheese and whey in the second half of the year.
"As we have seen from the results of others who operate in the UK dairy sector, 2008/09 was a year of challenges and volatility," chief executive Peter Humphreys said.
Another dairy co-operative, Dairy Farmers of Britain (DFOB), was put into receivership in early June, as a global slump in dairy markets helped to cut milk prices.
The slump has sparked farmer protests in several European countries and EU farm ministers are holding an extraordinary meeting on Oct. 5 to discuss the crisis.
"Recognising that rising on-farm costs were putting serious financial pressure on our producers, as a board we took the decision in late 2008 to utilise the reserves we had built up in order to shelter members as much as possible from the market downturn," Humphreys said in a statement.
The number of dairy farmers in Britain has halved in the last decade due to low prices and negative profit margins, turning the country into a liquid milk importer.
"We can't ignore these results but I think they have to be taken in a global context which has seen the world facing a very tough economic climate," said Gwyn Jones, chairman of the National Farmers' Union dairy board.
"The dairy sector itself has experienced incredible market volatility which is here to stay and which dairy farmers and milk buyers must start to manage," he added in a statement.