25 July 1997

Marques market share slips to 46% as members leave

By Philip Clarke

MILK Marques market share continues to slip as members turn to other buyers, retire or go bust.

Figures released to the trade as part of the latest selling round forecast a supply of 3030m litres in the six months from Oct 1997 to Mar 1998. Added to the 3375m litres available in the first half of the milk year, this suggests a total availability of 6405m litres.

This compares with 6834m litres sold in the last milk year – a drop of 6%. The new total gives Milk Marque an estimated market share of 46%, and is more than 1000m litres down on the 7600m litres it had signed up at vesting day in 1994.

"Yes we have been losing members, but there are signs that this is now slowing," said a spokeswoman. Much of the decline was due to farmers retiring, she added, with their quota going to other Milk Marque members.

Despite this, prices remain under intense pressure as the strength of sterling weighs heavily on the market. The latest selling round for October deliveries closed this week (Wednesday), though as FW went to press there were no details of the results.

But industry analysts believe Milk Marques average realisation could be back by as much as 3p/litre on the last (January) selling round, and this will be taken off milk cheques.

Roger Metcalf of Agrifood Consultants expects a repeat of last rounds underbidding, with buyers only taking 70% of supplies for an average 21.4p/litre.

Much of the remainder is likely to go to the spot market which, following another green £ revaluation on Aug 20, could fetch as little as 19p/litre. Overall, he anticipates a market realisation of 21p/litre for Milk Marque from Oct 1 – more than 3p less than the co-op is currently earning.

After costs and marketing charges, he reckons a producer with 450,000 litres of quota on every-other-day collection will be getting less than 20p/litre this winter (ignoring seasonality scales).

Milk Marque would not be drawn on what action it would take if it is left with large volumes unsold. The options are limited:

&#8226 Hold another selling round at lower prices.

&#8226 Accept all bids and offer the rest on the spot and short-term market.

&#8226 Extend the contract processing scheme.

A combination of the last two is the most likely outcome, with an increased volume going overseas to be turned into butter/skimmed milk powder for Milk Marque to then sell.