MIKE GALLACHER, the man who successfully orchestrated the turnaround at First Milk, has done his own turnaround and stepped down as chief executive.

The move was announced as The Scottish Farmer went to press on Wednesday, alongside the news that he will be succeeded by former Milk Link executive Shelagh Hancock.

Over the last two years Mr Gallacher has led a radical and successful transformation of First Milk, focusing on its core business in cheese and liquid contracts and divesting a number of loss making subsidiaries.

Together with major cost savings and operational improvements, this has driven a £30million improvement in the financial performance of the business and corresponding improvements in returns to members.

At the same time, the independent governance review he initiated has led to major changes in how the co-op is managed.

Shelagh Hancock has over 25 years’ experience in the food and agricultural supply sectors. Most recently she held the roles of managing director and business development director at Medina Dairy where she led the development of strategic relationships and business growth with major retailers.

Prior to this, she held a number of senior executive positions at the farmer-owned co-operative Milk Link.

First Milk chairman Clive Sharpe said: “Mike has led First Milk through a period of huge change, with enormous levels of energy and focus. In addition to delivering a real transformation in our business performance he has also built an effective team and put in place the modern governance processes that will underpin our future success.

“Mike’s departure is not a surprise as he has been open about his plans. Both Mike and I are delighted at the appointment of Shelagh who brings a wealth of experience to the role.”

Mr Gallacher said: “I am very proud of the huge progress made by all First Milk employees in transforming the business and in delivering improved results for our members. First Milk is now a very different business and customers and members can be confident in its future as a British dairy co-op

“The board and I have worked closely on the chief executive transition and I am delighted to see the appointment of Shelagh Hancock. Over the coming weeks we will be working together to deliver a smooth transition to ensure no loss of momentum as our business performance continues to improve.”

Ms Hancock said: “As a firm believer in the principle of farmers working together for the benefit of each other, I am delighted to be working again for a farmer co-operative. I strongly believe that First Milk has got a bright future and as a British farmer owned co-op we’ve got great credentials to build on.

“There are still further opportunities to develop the core business and I am confident that we can continue to build a strong and vibrant co-operative capable of creating value for its customers, and most importantly for our members.’’

Industry analyst Ian Potter said: “It is nearly two years to the day that Mike Gallacher was parachuted into First Milk at a time the co-op was on life support and at best only weeks away from the life support machine being turned off.

“It was a badly run business and the one thing the First Milk board did right was to re-shape, re-group and give him a free hand. As Mr Gallacher leaves, he hands over a very different business and whilst it will still have to operate profitably in a challenging environment, there are other UK dairy businesses in worse shape than First Milk.

“It’s unusual to see dairy chief executives involved in a smooth planned succession, but this is one such case. Normally it’s a sacking dressed up with lots of spin, " suggested Mr Potter. “Shelagh Hancock is essentially a co-op person and will steer First Milk on the same course Mr Gallacher has set with little, if any, need for a change in direction.”

NFU Scotland president Andrew McCornick said: “The union has spoken to Shelagh and congratulated her on her appointment to the top job at First Milk. We are planning to sit down with her and her team to discuss her vision for the business going forward.

“The difficult work carried out by Mike Gallacher in turning round the business merits recognition. The business and financial footing of First Milk are now significantly more robust but that period of change, coinciding with a downturn in the dairy sector, made that a very painful time for members’ businesses.

“With First Milk now on a firmer footing, members will be keen to hear at the forthcoming meetings what that may mean for their milk price moving forward.”