Fears of a cheese price war have emerged over plans to build a brand new commodity cheese plant in Cumbria.

Partners in Cheese is said to have secured more than 170 million litres of milk from the region's farmers in its long-running battle to win over producers. The 60,000 tonne per year plant is expected to cost £60m.

Dairy analyst Mike Bessey said the competition to secure customers could spark a bidding war if the dairy co-ops called on their cheaper unused capacity.

First Milk and Milk Link confirmed they could ramp up their cheese production for 30% of the cost of the new-build as long as they had buyers for the product.

"We could expand to 45,000 tonnes of production a year if they wanted us to, but only if there's demand," said Paul Rowe, site manager at Haverfordwest.

First Milk has already invested £2.5m in a new cheese room at the creamery, and is pumping a further £3m into efficiency measures. Coupled with increases at its Aspatria cheese factory, the co-op said it could raise production by 25,000 tonnes at a cost of well below £10m.

The Cheese Company, which belongs to Milk Link, has 14,000 tonnes of spare capacity and Dairy Crest's Davidstow factory also has headroom to produce 10,000 tonnes extra.

Bessey said: "In a price war, the weakest go to the wall, and it isn't always the oldest that go. Depreciated plants can have an advantage over new plants, particularly those with lots of borrowed money. PiC is going to need to push cheese hard through this plant and be very efficient."

But Gwyn Davies, chair of the NFU's dairy board, has slammed the co-ops for being short-sighted. He told The Grocer the co-ops must not stifle new plant in a bid to protect their own cheese businesses.

"We desperately need profitable commodity production - if not, milk production has to fall. Our processing simply isn't up to speed."

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