3 November 1995

Ayear on & still at odds

By Shelley Wright

ON THE first anniversary of vesting day, the arguments between Milk Marque and the Dairy Industry Federation remain unresolved.

Andrew Dare, Milk Marque chief executive, crossed swords with DIF director general John Price at last weeks Agra Europe dairy conference. The thrust of their debate has not changed: The DIF continues to insist that Milk Marque has abused its dominant monopoly position, while Mr Dare refuses to accept that there has ever been any impropriety in the selling system.

Mr Price said that the idea behind the deregulation of the milk industry was to get rid of the major problems associated with the Milk Marketing Board. Among these, he said, the MMB was a monopoly that was insensitive to the market, and it was an unnecessary and costly middleman that created a barrier between farmers and dairies.

But despite such problems, the milk marketing scheme had a system of checks and balances to control the boards activities. Deregulation, with Milk Marque simply an alias for the MMB, left the industry with all the same problems, but with none of the statutory controls. And Milk Marque had become an "unambitious purveyor of the average", just as the MMB had been, said Mr Price.

But Mr Dare told delegates that Mr Price had failed to point out that while the MMB was a monopoly seller, there had also been a monopoly buyer in the Dairy Trade Federation – the DIFs predecessor.

Marques myth

Mr Price then attacked the "myth", perpetuated by Milk Marque, that increased milk prices were set by the buyers. Milk Marque alone had set the prices he said. He added that the source of Milk Marques dominance was that the UK was only 85-90% self sufficient, so the supply of raw milk could not respond to the demand. And with Milk Marque controlling 70% of the market in England and Wales, buyers had little or no choice but to deal with the co-op.

But Mr Dare retaliated, saying that the EU was about 12% oversupplied so there was plenty of spare milk around. And he said that it was in the interests of dairy firms that there were strong farmer co-operatives to give the market some stability – although the companies had so far failed to realise this.

Mr Dare also refused to accept that milk prices were too high. The proof, he said, came from Milk Marques exports to France and Belgium, business that had now made Milk Marque the second biggest user of the Channel Tunnel. If the prices were too high then these customers would simply not buy the milk, Mr Dare said.

And he hit back at Mr Prices suggestion that Milk Marques establishment had prevented the development of competition in the market. "The latest figures from the Intervention Board show that there are now more than 100 milk buyers in the UK," Mr Dare said.

Mr Price said the DIF would prefer milk to be sold on an auction system, with a single ex-farm price determined by supply and demand. But Mr Dare dismissed the idea. He said the DIFs scheme was totally open to abuse, with nothing to prevent a couple of big companies getting together to rig the market, at the expense of smaller firms.

Mr Dare pleaded for the industry to move away from the constant arguments about prices, and to concentrate on the more important issues that would challenge it in the future.

He said that producers needed to increase their cows yields, through improved genetics. And the dairy companies needed to reverse the current position where the country exported relatively low value commodities while it imported high value dairy products.

Andrew Dare says there has never been any impropriety in Milk Marques selling system.

John Price believes Milk Marque has become an unambitious purveyor of the average.