THE newly-formed co-operative, Dairy Farmers of Britain, this week announced the launch of a major membership capitalisation programme to raise substantial funds for future investment.

Following the decisive vote in favour of the merger of The Milk Group and Zenith Milk, allowing Dairy Farmers of Britain to begin trading from July 1, members are being asked to show their commitment to the new co-operative by signing a members' financial agreement.

Designed to enable Dairy Farmers of Britain to increase its borrowing potential substantially, and within the shortest timescale, the agreement provides a choice of signing up to a contingent liability of 5ppl (member guarantee), or offering an investment loan of 1.25ppl (member liability loan).

Both options are based on the previous year's full production and will qualify members for a member capital account, which will accrue interest and build capital within the business under the producer's own name.

Board members were unanimous in their commitment to establishing Dairy Farmers of Britain as a co-operative which was not only democratic in structure, but also able to raise substantial funds for future investment and growth, said David Stern, chairman.

"Many of our members have already shown their support by investing in loan stock, preference shares and new W shares, but to unlock a significant amount of capital we need to do more," he said.

If all members signed and returned their agreements, combining that commitment with capital already in the business, could lead to a borrowing potential of up to £140m. Capital on this scale, invested in the right opportunities, would enable DFB to improve efficiency, cut costs and increase the profits generated, to the benefit of all members.

"We are already actively investigating a number of processing opportunities," said Mr Stern, " but, to act on these, we need a rapid uptake on signing the members' financial agreements." He was confident members would show their commitment by returning their agreements quickly.

Members' financial agreements, along with a summary pamphlet explaining the format of the agreement and the legal details, are being sent out this week.