Fear Express milk price offer sets meagre trend
8 September 2000
EXPRESS Dairies recent announcement that it is to pay suppliers an extra 1p/litre from October has triggered an angry backlash from farmers.
Producers, hoping for more, suspect the move may have set the tone for the whole autumn round. It is feared that other processors will not top Expresss offer, although farmers leaders point out that the market can bear much more.
Farmers For Action, which has held months of discussions with processors and supermarkets, says 3p/litre is available. The group claims retailers have accepted the need for a substantial increase to safeguard winter milk supplies and adds that skimmed milk and butter markets have rocketed.
FFA says the actual milk price equivalent for those two products is 4.6p/litre higher than the intervention equivalent, a rise of 4p/litre since the spring. Milk for cheese shows a similar trend. Yet MAFF figures for the first three months of this milk year show farmers have been receiving just 15p/litre, the lowest milk price for years.
The group, furious at Expresss move, acted quickly, blockading three Express Dairies depots on Sunday. The action persuaded Express chief executive Neil Davidson to meet FFA representatives on Monday.
But they said Mr Davidson described the price rise as very generous, although he was well aware of the 4p+/litre gap between actual and support milk values. Express could not increase its offer in case that gap narrowed later in the price contract period.
Unless Express changes its mind, blockades are likely to continue. It seems it is the only way to deal with these people, said FFA chairman Dave Handley.
The move, which takes Expresss standard litre value to just under 17.5p, also disappointed the NFU, which followed the FFA lead this week by calling for a 2-3p/litre rise. Deputy president Tim Bennett described the next two to three weeks as critical for the industry. If prices do not rise farmers will go out of business because banks will not allow overdrafts to rise.
NFU Milk adviser Philip Hudson added: This is not a good start. We believe there is more in the market place, and processors must look at what has happened to farmers. Clearly, there could be many leaving the industry.
Dairy Crest/Unigate, the UKs biggest ex-farm buyer and largest maker of commodity products, refused to comment. A letter sent out to producers this week stated only that prices would at least be maintained at the current level.
But Robert Wiseman Dairies, which concentrates on liquid milk sales to supermarkets, said it had been looking at a 2p/litre rise. There is an opportunity to move the milk price forward. But the industry has to move as a whole its fiercely competitive. Express has put the cat among the pigeons.
Farmer supply group Axis stressed the Express announcement bore little relation to what it might achieve.
There is a distinct difference between what one company decides to do with its direct suppliers, and what can be achieved by various groups supplying different customers at different times, said spokesman Jonathan Horrell. Like every other group, we are trying to get the price up quickly farmers desperately need it.