7 April 2000

HOW BUYERS LINE UP INUKMILKMARKET…

Before deregulation, milk

producers had no choice of

buyer and no marketing

decisions to make, but now

six years later the network

of buyers is greater than

ever. Jessica Buss reports

SINCE the Milk Marketing Board disbanded six years ago more than 130 milk buyers have become active in the UK; 27 of these are classed as big buyers reporting monthly figures to the Intervention Board.

But many producers, particularly those in more remote areas, are still faced with a limited choice of buyers, and some have found only Milk Marque and now its triplets keen to buy their milk.

From Apr 1 each MM triplet has a market share of less than 12%. Axis, Milk Link and Zenith are expected to source 1.6bn litres of the UKs 14bn litre milk quota, from between 3000 and 3500 producers each.

The other main farmer controlled milk co-ops, The Milk Group, United Milk and Scottish Milk, collect milk from a further 3000 producers.

Including MM triplets, these co-ops are now buying about half the UKs milk.

The Milk Group, based in Cheshire, collects 600m litres. Since deregulation of the MMB it has grown from 220 to 700 members and it is keen to continue growing.

March saw the co-op hold a series of recruitment meetings in existing and new areas. Its existing areas include the north west, central, east and south west midlands. But it is also keen to recruit members in south east Wales and south east England.

The Milk Groups Jim Bebb says producers are joining the co-op because they want to be part of a producer organisation. "They recognise price falls come through weak marketing and they want to strengthen their position."

In the year to Jan 2000 it offered a rolling average price of 18.53p, almost 2p/litre above Milk Marques standard price for daily collection, according to farmers weeklys price review.

This co-ops producer shareholders have also invested in processing, and its factory at Peterborough, Cambs, is capable of processing 50m litres a year.

"The Milk Group will do more processing when the right opportunities come along," he adds.

United Milk is another group with substantial member numbers joining when it was formed by the amalgamation of five smaller groups a year ago. Its 800 producer members supply 810m litres of milk a year in south, south-west and central England.

In March the group announced plans for a new processing and manufacturing facility. It has invited non-member producers to take part in this venture, initially by becoming associate members with a shareholding.

These associate members can join a register to supply the new facility when it is established as direct supply producers, says chief executive, Don Morris.

Direct supply farmer group Express Milk Partnership is now supplying Express Dairies with 1bn litres a year, half its milk requirement, says chairman, Richard Smith.

After considering the big co-ops, direct supply to the other big dairy companies must account for billions of litres.

Dairy Crest says that about half of its milk supply is now sourced direct and Unigate, which it is expected to complete a merger with in May, takes more than 60% direct.

MD foods is supplied by 600 milk producers and Nestlé and Robert Wiseman Dairies are also sourcing milk direct from producers in some areas.

Producer co-ops and direct suppliers

Producers (approx) Milk brokered

Axis 3,000-3,500 1.6bn litres

Milk Link 3,000-3,500 1.6bn litres

Zenith 3,000-3,500 1.6bn litres

United Milk 800 810m litres

Milk Group 700 600m litres

Scottish Milk 1,500 *

Express MP 1,500 1bn litres

Unigate Over 60% of milk required supplied direct *

Dairy Crest About 50% of requirements *

MD Foods 600 *

*Not available.