9 June 1995

Changes to milk selling leave DIF unimpressed

By Shelley Wright

MILK Marque has announced changes to its selling system, which, it believes, address concerns expressed by dairy companies.

The revised scheme, described this week by chief executive, Andrew Dare, as "evolution rather than revolution", will start in July.

But the Dairy Industry Federation, whose members buy over 90% of the milk in England and Wales, was unimpressed.

DIF president, Neil Davidson, said: "The changes Milk Marque has announced are to be welcomed in as far as they go but the system remains fundamentally flawed."

In particular, he complained that Milk Marque had retained its ability to set prices and the potential to abuse its monopoly position.

Mr Dare said the changes had been made after discussions with customers, retailers and the DIF over the past six months.

He said firms had asked for more flexibility in the system to overcome the "cliff edge" they faced in having only one chance to secure a years milk. They also wanted greater transparency in the selling process and improved traceability of milk. The changes were designed to meet these requests.

The new system involves:

lIntroducing six- and 18-month contracts to supplement the existing annual contract.

lProviding two main buying opportunities a year instead of only one. Milk will be sold in April and October.

lAllocating more milk to a short-term monthly market to provide greater flexibility and to accommodate new buyers.

lSampling every collection from farms to improve its traceability.

lMaking all bids from dairies binding.

To bring contracts into line with the April and October sale dates, contracts for this year only will run for five, 11 and 17 months from Nov 1.

The DIF insisted its central objections – which included linking services with security of supply, Milk Marques monopoly over milk haulage and the method of pricing and allocation – had not been addressed.

But in the absence of any intervention by the Office of Fair Trading the bidding process remains unchanged. Milk Marque will announce in July the volume of milk available and will set initial prices for each contract. Prices will then move up or down depending on how much milk the dairies have bid for. Completion is aimed for late July or early August. &#42