Isle of Man Creamery boss Findlay Macleod says that his dairy has to charge more for milk than cheaper English and Welsh rivals because of higher costs.
He has blamed redundancies at the business on difficult trading conditions and the very poor weather over the past year.
Speaking following the announcement the business is to make 10 people redundant, he said the bad weather and higher overheads in the Isle of Man had both played a part.
Referring to competition from imported products, he said: ‘Scale is an issue here. We deal with around 6.5 million litres of milk a year, whereas Yeo Valley, for example will be handling something like 1,000 million litres per year, so that really puts it in perspective.’
He said he was aware of a dairy in Wales which recently stopped milk production because it did not consider 12 million litres per year to be viable.
‘In addition, we have higher overheads than the UK in terms of our power costs and also our water costs,’ he said.
‘The Isle of Man is an expensive place to manufacture and we also operate on a smaller scale. Elsewhere you wouldn’t have a milk plant serving just 80,000 people.
‘But the advantage we have here on an island is it’s fresher because there are fewer food miles. It’s straight from the cow to the Creamery to the customer.’
Mr Macleod said milk supplied to the creamery last year fell by 11 per cent and in the first three months of this year by a further 11 per cent.
Milk production in the UK fell by around 10 per cent this year. He said farmers had been under pressure because the recent poor weather meant poorer pasture which in turn affected milk yields and they had also faced higher overheads as a result of having to buy in food for dairy herds.
Smaller quantities of milk meant the cost of processing it per pint was higher and they had also had to pay more to the farmers who had been hit with higher feed costs. He said they had been forced to reduce overheads by laying off staff. There are to be five voluntary redundancies and five compulsory. Two staff had also agreed a voluntary cut in their working hours.
He added: ‘Our staff are our most valuable asset, so I will be sad to see any of them go.’