It was also in discussions with its Kintyre farmers about the future of its Cambeltown Creamery.
First Milk has announced it was consulting with employees about proposed changes at its Scottish creameries.
The Scottish creameries were put up for sale in April 2018 when First Milk announced its Cambeltown and Arran Creameries were not core to its business strategy for the future.
However, it has not been possible to conclude the sale of its Arran site and the cooperative was now consulting over its proposed intention to close it.
First Milk has also confirmed it was in discussions with its farmer members in Kintyre, with the active involvement of the Scottish Government, which it hoped would conclude with the Campbeltown Creamery being owned by the local farmers.
The intention was for the farmers to form a new cooperative operating the creamery independently of First Milk.
Due to the ‘ongoing economic performance’ of the site and in anticipation the scale of operations would likely change under new ownership, First Milk was consulting with employees on proposals to scale down.
Shelagh Hancock, chief executive, said she was deeply disappointed it had not been possible to sell the Arran Creamery.
“We remain hopeful that it will be possible to secure the future of the Campbeltown Creamery in the ownership of the local farmers and the proposed changes that we have announced today will help with that.
“We fully appreciate that these developments have significant consequences for colleagues at the creameries and the local community, but it is important that we act in the best interest of the wider business and our farmer members and continue with the solid progress we have made in strengthening and developing First Milk.
“We regret the impact this decision will have on our colleagues and are committed to treating those affected fairly and with consideration during this difficult time.”
James Barbour, chairman of the Kintyre milk producers working group, said First Milk had worked hard to secure a sustainable future for the Campbeltown site.
“Unfortunately, it has not been possible to secure an external buyer and yet we believe that it is important to retain processing capacity on Kintyre for the long-term security of the dairy farmers here.
“As a result, we are working together to try to secure the site for the future, although there is still considerable work to do to bring this to a conclusion.”
NFU Scotland milk committee chair John Smith said: “The news coming out of Arran and Campbeltown is extremely disappointing, especially for the staff and dairy farmers who will be affected by the decision.
“There has been a cloud of doubt hanging over both factories for the past 15 months, since First Milk announced their intention to offload the creameries in April 2018, and this decision is unfortunately the outcome.
“NFU Scotland has been involved and offered support to the communities over the past year, with several of our members certain to be affected.
“Being a dairy farmer from Campbeltown I am well aware of the implications this announcement will have on the dairy supply chain and the wider community.
“The lack of dairy processing in Scotland is a serious concern for our industry, especially with the uncertainty of Brexit looming, and loses like these only make the dairy supply chain that little bit more vulnerable.
“Despite the scaling down of production in Campbeltown, we welcome the news that First Milk has confirmed it is in discussions with local Kintyre farming members, with the active involvement of the Scottish Government, which will hopefully conclude with the Campbeltown Creamery being owned by the local farmers.
“It is vital that both milk and cheese productions continue in an area which plays a vital role in the dairy sector in Scotland.”