PETERS and Brownes managing director Graham Laitt has made it clear his contracts with producers are for all their milk and therefore can't supply milk to both his company and the farmer-owned Challenge Dairy Co-operative. This could present a quandary for a number of producers, including three of the Challenge Dairy Co-operative's producer directors (including chairman Larry Brennen), who are all Peters and Brownes suppliers. His comment came not long after Peters and Brownes made an unsuccessful bid for $12.5 million in state funding made available for WA milk processing after deregulation. The Challenge Dairy Co-operative managed to gain $10m of the allocated $11.2m. Mr Laitt's plan, put to farmers late in the peace and somewhat short on detail, included turning his Brunswick cheese factory into a Co-op with Kiwi Co-operative Dairies, who were apparently prepared to invest in whey processing. He dismissed rumours Challenge Dairy Co-operative was in talks with Kiwi to enable some sort of takeover and said the opportunity to get the New Zealand dairy processing company involved in WA was lost. "Kiwi has made it quite clear, they are not coming back," Mr Laitt said. Kiwi recently bought a majority shareholding in Peters and Brownes but Mr Laitt said he had control of the company for the next two years. He said his strategy now was for market dominance. "There was never an option to have more than one player in this game," he said. "After all, we are a corporate animal." Part of his strategy would be to take on board WA's most efficient producers, which may fit in with some Capel suppliers who haven't yet joined Challenge. Peters and Brownes are believed to have about 170 suppliers and, with the entire WA dairy industry at about 400 dairy farms, Co-op membership will be restricted. Mr Laitt had supported the Challenge Dairy Co-operative's feasibility study last year. Meanwhile, the Challenge Dairy Co-operative is due to have its first annual general meeting today, with three new producers' seats up for grabs. Among the new contenders are Geoff Jenkins, Eric Biddulph and Mike Norton.