Natural Dairies, the Donegal-based dairy blockaded by farmers last year because it supplied milk to Dunnes Stores for its low-cost own-label product, has ceased trading with the loss of 20 jobs.
The family-owned dairy, which sourced more than 90 per cent of its milk in Northern Ireland, found it could not replace its supplies with milk from the Republic when it had to halt imports because of the outbreak of foot-and-mouth disease.
Attempts to obtain milk from nearby Donegal Creameries and Lakeland Dairies ended in failure. Donegal Creameries said yesterday it had been unable to source sufficient supplies of adequate quality to supply the Convoy-based Natural Dairies.
"Our existing supply of milk in Donegal is taxed to the utmost," managing director Mr John Keon said. "It's a bad time of year as milk supply is not in full flow," he said, noting that other dairies had also been asking for milk.
It is understood that Lakeland supplied the company with milk for a number of days last week before cutting off the supply.
The company was not available to comment yesterday but industry sources say pressure to halt supplies may have been brought to bear on the dairy by elements in the farming community. Owner of Natural Dairies, Mr Molloy, said the bulk of the workforce was laid off on Thursday and only a skeleton staff remained. The problems at Natural Dairies are expected to have a knock-on impact on two other firms owned by Mr Molloy - cheese manufacturer Green Pastures and a joint venture, Yeats Country Cheese.
The dairy was the centre of controversy last October when it was picketed by farmers from all over the State, who objected to it supplying raw milk to Dunnes Stores.
The picket, which lasted for nearly a week, forced the dairy to put its workers on protective notice and cost it £150,000 (#190,461), according to Mr Molloy.
It was eventually lifted following the intervention of Irish Farmers' Association (IFA) president, Mr Tom Parlon. The IFA denied being involved in organising the protest although most of those picketing the dairy were IFA members.
The Competition Authority declined to comment yesterday on the situation at Natural Dairies but is understood to be very concerned about the matter.
Natural Dairies started up in 1988 and has grown production from just 300 gallons a day in 1990 to 80,000 gallons a week. It has been supplying Dunnes Stores for 10 years. A Dunnes Stores spokeswoman said yesterday it was "very concerned" at the situation that had arisen at Natural Dairies. She said Dunnes would run out of its own-label St Bernard milk today and, while it would continue to sell branded milk, its customers would be disadvantaged.
