7 July 1995

Dairy firms attack over Milk Marque price hike

By Shelley Wright

MILK Marque has caused outrage among dairy companies by announcing a price increase of 0.5p/litre for each of its seven supply contracts.

Announcing the new rates at the Royal Show on Tuesday (July 4), chief executive Andrew Dare claimed they represented a drop in real terms over last years prices.

Quotes for the first round of bidding ranged from 24.7p/litre for the lower priced "residual" contracts to 27.5p/litre for the Premier service contract.

Mr Dare said farmers probably expected their prices to keep up with inflation. "But I think most realise that we will not see the sort of increases we achieved last year."

But the Dairy Industry Federation immediately slammed the increase and said it was further evidence of abuse by an unregulated monopoly. DIF president, Neil Davidson, said a 0.5p/litre increase on last years rates would be greeted with "outrage by the vast majority of buyers".

Mr Dare said Milk Marque had the annual equivalent of 7.4bn litres of milk to sell, compared with 7.6bn last year. The deficit was mainly due to farmers retiring, rather than members leaving to supply other buyers, he suggested.

If the dairy companies first-round bids, due in by July 19, exceeded about 7.5bn litres, then there would be a second round. But Mr Dare refused to say how much prices would increase if a second round were needed.

"Last year a market balance was achieved after three rounds of bidding. In the last year EC support prices for milk have risen by 2.5p/litre due to devaluation of the green £. In its initial prices, Milk Marque is absorbing a substantial proportion of these currency changes." Mr Dare added that, in addition to the annual contracts available last year, Milk Marque was offering milk on six-month and 18-month contracts.

Roger Clarke, commercial director of MD Foods, said he was surprised that there should have been any price increase, given the current market conditions. &#42