1 March 2002

Dairymen remain loyal to direct supply contracts

JUST 5% of dairy farmers belonging to West Country Milk Producers have cancelled their direct supply contracts to move to co-op Milk Link.

Talks between the groups began in January 2001 when Robert Binns, spokesman for the ex-WMP members, expected most to change loyalties. But foot-and-mouth and an increase in prices paid by Dairy Crest altered those plans.

Of WMPs 760 members, who produce 500m litres/year, only 5% – worth 25m litres – decided to make the move, which will take place on Apr 1 this year.

Milk Links decision to go into processing also affected producers plans. The co-ops Neil MacFarlane reckons restructuring was seen as a positive move, but Mr Binns says the financial implications made some members nervous.

Milk Link sells about 1.4bn litres of milk/year. From every litre of milk, 0.5p is kept as capital to invest in processing and 5p is available as a guarantee.

The extra 25m litres from former WMP members will raise £125,000 of capital for Milk Link and will guarantee a bank loan of £1.25m.

"Not only does having more members drive our costs down and raise financial resources, but we have typically always been short of milk in our area, so this balances supply to meet our consumers demands," says Mr MacFarlane. &#42