19 May 1995

1995 milk prices need be no lower – says Milk Marque

By Shelley Wright

MILK producers have no reason to expect lower prices this year, according to Milk Marque chief executive Andrew Dare.

In fact, if returns were to keep up with the European target price, MMs benchmark, there should be a 3% increase, he added.

But, he told a press conference at co-op CWGs open day last week, milk prices would be determined when MM sold its supplies in the summer. "We will have to go through another selling process as we did last year," he said.

He did, however, reassure farmers that there was no reason to speculate that prices would be lower.

Mr Dare dismissed the Dairy Industry Federations proposal to scrap the existing selling system (in which buyers bid for volumes of milk at prices predetermined by MM) and replace it with an auction that would return a single market price (Business, Apr 21). He believed such a system would be open to collusion between buyers.

But he said that MM would announce some changes to its selling system in June. Following discussions with the DIF, and with customers on an individual basis, he said MM would introduce six-month contracts. Another change would make "first round bids" binding, he added. There was criticism last year that companies could make bids and then withdraw them, creating confusion.

Mr Dare said he was also having discussions with customers on the possibility of MM selling milk based on its constituent value rather than on volume. "Some would like to have milk of a fixed protein and fat level delivered to them every day of the year. Others might be happy to take whatever is in the tanker and pay for it according to its constituent values," he said. &#42