Sodiaal, the largest dairy co-op in France, told local media this Wednesday that it has entered talks with its Chinese partner Synutra to buy it out of their joint processing plant in Carhaix, Brittany.

There had been widespread speculation in recent days after farming organisations reported that debt collectors had visited the site earlier this month.

Sodiaal and Synutra agreed in 2012 to build two milk driers at the plant. The world's fifth largest dairy processor was to supply 288m litres annually from some of its 11,500 French supppliers as milk quotas lifted. China's third largest infant formula manufacturer was to export powders to its home country.

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Two years into the plant's operation, it has now emerged that business failed to reached expected volumes and Sodiaal is being forced to consider a full takeover of the joint venture to avoid its collapse. The co-op's board has yet to approve a potential buy-out of Synutra.

The Chinese company has other joint ventures with French milk processors and there are now also concerns about those plants.