1 October 1999

MM chairman says split is sad but sensible sabreak-up is best route to progress

By Jessica Buss

LAST weeks announcement that Milk Marque will split into three was met with reluctant approval by most members at the EDFE, but many see employing the right people as crucial to the success of the new co-ops.

Speaking at a Spotlight on Profit Forum, Milk Marque chairman Poul Christensen said the Monopolies and Mergers Commission report had one single recommendation – to split MM.

The solution agreed by MMs council is to split into three. Splitting in two was not acceptable to the government, but three separate co-ops have received the ministers approval. A members vote will take place at extraordinary general meetings in October.

In an earlier forum, farms minister Nick Brown said the split will allow farmers to enter processing and create strategic alliances that were not allowed by the regulator.

Mr Christensen also believes the new co-ops will have freedom to grow. They may begin processing milk, but can also form alliances with other co-ops and processors.

MM has set itself a tough time-scale for the new co-ops. "They will be independent businesses, marketing their own milk from Apr 1, 2000."

But these businesses will not be small; Mr Christensen argued they will each have a turnover of £4.5m.

Producers questioning Mr Christensen during the forum were concerned about who would run these businesses. He answered that MM has professionals negotiating milk prices now, and even the latest selling round could have been far worse without them. "But we must have the right people in each of these co-ops."

That was echoed by West Sussex MM member Jim Harrison, speaking to farmers weekly after the forum. "The quality of staff is by far the biggest problem for each co-op, but if we can get the right people there are opportunities."

He is concerned about low milk price and agrees that MM has to split. While milk prices are unlikely to rise in the short-term, he hopes it will bring long-term security.

Somerset producer Barrie Bryer is sad that MM will split, but believes it necessary. "We want to continue to co-operate and hope these new co-ops will grow." He agreed with MMs proposal to act quickly.

But Andersons partner David Neill expressed concern that the timetable was too tight for recruiting the people necessary to make these MM triplets successful.

"They must be quality people, currently running a high turnover business. Farmers can be non-executives, but should not be making decisions on how these businesses are run."

Genus chief executive Richard Wood supports MMs decision, but agreed that to be successful these co-ops must behave more like commercial companies.

But West Sussex producer Gwyn Jones plans to vote against the motion to split MM at the members EGM. He believes a strong national co-op is worth fighting for and restructuring would waste producers assets currently tied up in MM.

He proposes a board of non-farming representatives – of top commercial people, paid proper salaries – is appointed to run and fight for MM.