Staff at Tomlinsons Dairies have been told the company has gone into administration, causing the loss of 190 jobs.
The confirmation follows concerns from farmer suppliers, who said they were told over the weekend that the processor could no longer accept milk deliveries.
NFU Cymru called for 'urgent clarification' from the Wrexham-based dairy firm.
Following a staff meeting on Monday afternoon (14 October), it has now been confirmed that the company has gone into administration.
A Welsh government spokesman responded, saying the news is 'very disappointing'.
“We have worked closely with Tomlinsons Dairies during the past 18 months to try and help them resolve their ongoing business issues.
“We have now established a task force to work directly with the staff affected by the closure and are in discussions with farming unions and other stakeholders to consider what support is required at this difficult time.”
The Farmers' Union of Wales (FUW) said it is 'extremely concerned' for its members affected.
“We had no prior warning and are extremely disappointed that farmers are left in a predicament where they have no one to collect their milk,” FUW Vice President, Eifion Huws said.
“We have lost yet another major processor in Wales, this will come as a severe blow to farmers, workers and the industry as a whole at a time when significant efforts are being made to bolster and build on our unique Welsh brand.”
Union representatives will meet Welsh government's rural affair minister Lesley Griffiths later this week.
The decision by Tomlinsons' to cease milk collection comes after a significant £22 million funding boost in 2017 which saw an expansion of their cold storage facilities and the creation of 70 jobs.
The investment followed the dairy firm securing a contract with retailer Sainsbury’s.
