13 June 1997

Holland to take MMs surplus for processing

MILK MARQUE will soon be sending milk to Holland to be contract processed, chief executive David Yeomans has revealed.

It follows the co-ops invitation for companies to make butter and skimmed milk powder with its surplus milk on a fixed fee basis.

UK companies did not respond to the offer. "Commercial considerations had been overridden by politics," claimed Mr Yeomans.

Of the "considerable" volume heading there by Eurotunnel and ferry from July, Mr Yeomans said: "It is ridiculous that we have to send milk to Holland to get it processed at a commercial rate."

Assuming there would be "backloading" – ensuring tankers were also full on the return journey – the extra transport cost would be about 1.5p/litre.

Processing margin

But Continental firms can process for less than half what the Dairy Industry Federation suggest is an adequate processing margin of 5.3p/litre, he said.

Repeating his criticisms of the UKs inefficient processing sector, he added: "At the moment, we have a ball and chain around our ankles. We will not sit on our hands and allow the industry to become moribund. Milk Marque will invest in further processing if it is necessary."

And such direct involvement has come closer following the financial restructuring proposals to exchange members certificates of entitlements for preference shares.

This would create a stronger financial base with which to raise capital. It would also allow £15m of reserves to be paid back to members – representing about 0.25p for every litre supplied this year, said Mr Yeomans.

By Wednesday, about 3000 of the 17,500 eligible members had returned their certificates.

MMtake down

Midweek also saw the announcement of Milk Marques annual results, showing pre-tax profits of £14.2m in the year to Mar 31.

The co-op marketed 6.8bn litres taking turnover to £1.8bn, compared with almost £2bn on 7.5bn litres in the previous 12 months.

Farmers supplying the co-op will receive a 0.05p/litre bonus next month for milk they produced in the year to March, taking the average price for the year to 24.26p/litre.

This was only 0.15p/litre less than the previous year, reflecting the better quality milk supplied, and the fact that successive green £ revaluations had not filtered through into milk cheques.

Cost-cutting had been a high priority during the year, with transport a key area. The period saw every other day collection rise from 35% to 59% of members.n