3 March 2000

Milk Link co-op pulls in strong support in south

By Robert Harris

DAIRY farmers across the south of England have shown strong support for new co-op Milk Link, with 95% of potential members signing up by the Feb 29 deadline.

The company, one of three regional co-ops spawned from the enforced break-up of Milk Marque, was officially launched three weeks ago.

"Staggered," is how operations director Neil MacFarlane describes the result. "Producers have reacted brilliantly."

Only about 150 of the 3100 Milk Marque members in the region failed to sign. Most are quitting the dairy sector rather than moving to another buyer, the company claims.

The other two Milk Marque "daughter" co-ops – Axis in the midlands, and Zenith in the north – also reckon to be recruiting members quickly. Neither company has set a deadline, though members must join by Apr 1 to qualify for certain benefits, including profit sharing.

Axis reckons about 55% of potential members have signed so far. Zenith has only been recruiting for a week, but reports a brisk start.

Philip Hudson, NFU milk adviser, says progress is very positive. "The groups have been facing a very tight timetable, and have done an excellent job."

But there are fewer buyers in Milk Links area, particularly in the south west, he points out. "The other two groups are in a slightly more difficult position, and could face more competition."

The show of support has helped discussions with potential customers, says Mr MacFarlane, though he will not disclose what milk price farmers can expect next month.

"I am not going to speculate. Our main conclusion is that we can find a home for all of our milk." Flexible "option" contracts are proving popular, he notes.

Cost is also important in determining farm-gate prices, he adds. "We are already working on common collection with a number of customers." Even a saving of 0.1p/litre would cut the annual transport bill by £1.4m, and similar savings are expected in administration when the central services agreement with Milk Marque ends in April, 2001, he adds.

Mike Stevens, membership manager at Zenith, says milk selling is going well. "It is difficult to say where prices are going. The pressure is on; the market has dropped since Milk Marque last sold milk."

The k was worth just 61p midweek, a 9% fall from last Julys levels. This has pushed the intervention milk price equivalent, a commonly used marker among processors, down by over 1.5p/litre, he notes. "But we are selling milk in a different way, and we are looking to take out costs."

Dairy Crests announcement that it is cutting its prices to farmers next month reflects that pressure. Producers supplying the Fenstanton plant will get 1.5p/litre less, while those in the Aspatria area face a 2p/litre reduction. Other dairies are expected to announce cuts soon.

"Short of the £ falling out of bed, there is no short-term fix," says Mr Hudson. "A lot of people could be pushed out of the industry as a result of these unsustainable prices." &#42