Match buyers power, Union tells milk groups

By FWi staff

NFU leaders have issued a renewed challenge to milk groups, urging them to increase the pace of consolidation to boost farm-gate milk prices.

The union has published Milk Groups – An NFU Guide, available from regional offices, to help the process.

NFU president Ben Gill reckons about 60% of dairy farmers in Great Britain should be represented by just three big groups, to match the power of the buyers.

Although the process has started, the number of formal milk groups (excluding former milk marketing boards) in England and Wales fell from 43 in 1998 to 36 last year.

There is still a long way to go, he told a press conference in London this week.

There are fewer than a dozen large private dairy processors and only five large multiple retailers.

“Any group has to ask whether they are adding value and are they doing so at the least cost? If they cant answer, I would argue that they need to make a strategic alliance with other groups,” said Mr Gill.

Terrig Morgan, NFU milk committee chairman, added: “It is not our policy to wield a big stick. Bigger groups would allow us to negotiate better because too many farming groups can bid the price down.”

Amalgamation would also encourage strategic alliances with processors and increase economies of scale, particularly on transport costs.

But groups would need to put the right management structures in place, warned Mr Gill. “In the past we have paid peanuts and got monkeys far too often.”