Which is best when it comes to buying milk - co-operatives or private companies?
A quick glance at the latest DairyCo league table in this week's Prices and Trends section of Farmers Weekly would suggest that it is the latter.
As Wiseman, Arla and Dairy Crest all push for promotion, co-ops such as Milk Link and First Milk continue to languish in the bottom half.
League tables like this are often criticised for providing just a snapshot of the market at any one point in time. That is not fair criticism as the table is ranked according to the 12-month rolling average rather than the size of the latest milk cheque.
But if you are looking for a longer term perspective, then the recent annual report and financial statement from Robert Wiseman Dairies sheds some very interesting light.
In a section called Partnerships that Perform, it sets out a table prepared by milkprices.com which shows how much money a dairy farmer producing 1m litre/year of 4% butterfat, 3.3% protein milk, would have earned over the past 14 years...
Not surprisingly, given the context, it shows that a Wiseman producer would have received the most over that period at £2.98m. This is £56k more than the next best payer, Arla, £78k more than Dairy Crest, £215k more than First Milk and a massive £259k more than Milk Link.
I remember at the time of deregulation in 1994 there was a deep suspicion amongst dairy farmers that the new breed of direct buyers were trying to pick off milk producers with top of the range prices.
Their aim, it was said, was to divide and rule, after which they would slash prices in order to maximise returns to their shareholders. There was a strong drive at the time for farmers to stick together, initially as one co-op, Milk Marque, and when that proved unsustainable, as three regional co-ops, Milk Link, Zenith and Axis.
It's interesting to see that, 15 years later, it is still the private companies that are paying the best prices. But this, I suspect, is more down to the products they sell rather than the particular status of their business structure.
* For more blog postings click here. And why not add a comment below
| Tweet |
|
Philip I totally agree with your conclusions. I have always said that it is the market and value of the end product of the milk buyer which determines what they can pay farmers for their milk. If as a dairy farmer you want to really work out which to go with, I suggest studying the company reports for the PLC's and the Co-ops to work out which sectors they are in and what those sectors are returning. These will have far more influence on what they can afford to pay than their business structure.
James M-H