CHEESES PRICE PRESSURE

CHEESES PRICE PRESSUREBy Andrew Shirley

 CHEESE IS the latest dairy commodity to come under pressure despite stocks remaining at four-year lows.

A mixture of retail power and alleged under-selling by the newly acquired cheese businesses of some co-ops is being widely blamed for a situation that has seen at least one farmhouse Cheddar maker being told to cut its prices by the equivalent of over 2p/litre.

Another manufacturer, who did not want to be named, said the major retailers were putting their business up for internet tender and some co-ops were putting in low bids that forced the incumbent supplier to drop its own prices or face losing the business. “In all seriousness the power of the retailers is frightening.”

David Handley of Farmers for Action specifically singled out Milk Link, which bought the majority of the cheese interests of Irish food company Glanbia to form The Cheese Company, the UK’s second largest processor, earlier this year. “They pay the lowest price and are trying to pull everybody down to their level,” he claimed.

Will Sanderson, Milk Link corporate affairs director, said the co-op was not to blame. “The Cheese Company, like all other major cheese manufacturers, would like to build profitable and mutually beneficial partnerships with major retailers, but it is not interested in building market share on the basis of low prices. Indeed we are actively seeking to increase our prices across major retail and food service contracts to reflect the firm cheese market.”

Arthur Reeves, Dairy Crest”s managing director of direct supplies, said he was extremely concerned by the situation. “Others are selling cheese £100-£200/t cheaper than us and supermarkets will move business for a lot less than that.”

Mr Reeves said that Dairy Crest, the UK’s largest cheesemaker, would be holding its price for all milk in December but this was only after tough negotiations with Dairy Crest Direct, its direct supply group. “At some point something will have to give.”

Tom Hind, NFU chief dairy adviser, said he was fed up with people talking the market down.

“There is no reason for it. The spot market remains firm for mild and mature cheddar and competition from Ireland should be minimal given the exchange rate.” He said under-selling by anybody would be unacceptable.

John Allen of Kite Consulting said: “I cannot see any reason why the market should be falling. People are giving away their product.”