On Monday this week, Dutch dairy co-op FrieslandCampina announced it had reached an agreement to sell its milk powder business in Aalter, Belgium, to rival Dutch dairy company Royal A-Ware.

While the details of the transaction were not disclosed, FrieslandCampina said the milk powder business at Aalter has an annual capacity of 45,000t and employs about 40 people. FrieslandCampina said it will retain an interest in the Aalter site as it will continue to produce consumer dairy products from one side of the plant, while the milk powder towers at the site will transfer to Royal A-Ware.

On the face of it, this may seem like a straightforward transaction but it does pose some interesting questions, including what this means for Glanbia Ireland’s joint venture proposal with Royal A-Ware in Belview.

Does it really want to enter this intensely competitive commodity market or does it have an alternative plan?

Up to now, Royal A-Ware has never dabbled in low-value milk powders. Does it really want to enter this intensely competitive commodity market or does it have an alternative plan? It is believed the Aalter milk processing plant is supplied by about 400m litres of raw milk per annum, which may be the real attraction here for Royal A-Ware.

With its joint venture plans with Glanbia Ireland now facing a drawn-out judicial review, could Royal A-Ware be looking at Belgium as a new location for a future cheese plant? A milk pool of 400m litres would be enough to make up to 50,000t of Gouda or Edam cheese every year.