German firms Schwälbchen Molkerei and Hochwald Foods will partner for long-life milk production and sales of raw milk.

Schwälbchen CEO Günter Berz-List and Hochwald managing director Detlef Latka signed a letter of intent (LoI) in Thalfang. As per the LoI, Schwälbchen will shift all production of long-life milk to its new Rhineland-Palatinate-based partner.

Berz-List said: "The agreement envisages that Hochwalt takes on production of long-life milk by 1 January 2017.

"The legal independence of our company remains unaffected."

"The legal independence of our company remains unaffected."

In Hesse, the Rhineland-Palatinate and northern Baden-Wuerttemberg, Schwälbchen will focus on marketing of milk and fresh products in the Green Line and coffee drink Caffreddo.

Hochwald, which is the second largest German dairy cooperative, with its production capacities will undertake complete production of shelf-durable products for Schwälbchen.

It has eight dairy facilities with capacities for fresh and shelf-stable milk products, which are sold under brand names such as Bärenmarke, Elinas or Hochwald.

Further, with regard to commodities, both companies will work together in the future, which implies that around 20 million kg of Schwälbchen milk will be delivered to Hessian Hochwald locations.

On the other hand, Schwälbchen will continue to remain responsible for milk costing and production consulting.

Detlef Latka said: "The cooperation between our two companies offers several advantages, so that the joint optimisation of production and logistics makes absolute sense."