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MMC milk price data flawed unions

16 July 1999
MMC milk price data flawed — unions

KEY milk price figures in the recent Monopolies and Mergers Commission report on the supply of milk in Britain are flawed and should be re-examined, say farming unions … more …


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MMC milk price data flawed unions

16 July 1999
MMC milk price data flawed — unions

By Robert Harris

KEY milk price figures in the recent Monopolies and Mergers Commission (MMC) report on the supply of milk in Britain are flawed and should be re-examined, say farming unions.

Using these figures, the MMC report found that Milk Marque had exploited its monopoly position and consumers paid more for fresh liquid milk as a result.

This led trade secretary, Stephen Byers, last week to accept the recommendation that Milk Marques selling system should be changed, and to restrict further moves into processing.

“Of all the findings, the fact that consumers have been adversely affected is perhaps the most difficult to understand,” says Siôn Roberts, chief economist at the NFU.

“The fact the MMC found that Milk Marque was a scale monopolist by virtue of its 49.6% share of the market is not that contentious, even though its share has now fallen a further 10%. But there appears to be no evidence that consumers have paid higher prices because of this.”

The average farmgate milk price in the 12 months to April this year was over 20% lower than in the 12 months after vesting day in November 1994, says Mr Roberts. Over the same period, the retail price for fresh milk rose by about 2% (graph, right).

  Farmgate and retail milk prices

But the report, drawing on several studies from the Dairy Industry Federation and Express Dairies, as well as the MMCs own statistical analysis, concludes that for every 1ppl change in the farm price, the retail value changes by about 0.5ppl in the medium term.

“Using the data between November 1994 and April 1999, we can find no statistically significant relationship between the MAFF farmgate price for milk and the retail price as published by the Central Statistical Office,” says Mr Roberts.

All the evidence is in the report, says Jim Begg, director general of the DIF.

“The MMC was looking at two things in particular, whether the price was higher than it would otherwise have been, and, if so, whether that increase gets through to the consumer.

“The MMC found the answer was yes in both cases. Its decision was based on very detailed econometric analysis.”

That decision should be accepted, he says. “Rather than looking back, we should all look to the future. The MMC has set out actions, and so have ministers.

“The concern should be to make sure they are implemented, to ensure we get a fairer selling system, and fair milk price. We must start working together to take on the competition.”

But the Scottish NFU wants the whole milk marketing chain investigated. “Scotlands parliament must investigate who is benefiting from these rock bottom prices.

“If it is not consumers, it is certainly not producers,” said vice-president, Peter Chapman.

    Read more on:
  • News

MMC milk price data flawed unions

16 July 1999
MMC milk price data flawed — unions

KEY milk price figures in the recent Monopolies and Mergers Commission report on the supply of milk in Britain are flawed and should be re-examined, say farming unions
… more …



todays news



 on GM crops – CLICK HERE

Euro1 = £0.6509 £1 = Euro1.5363 
Help a child and win a Fastrac
ADAS, CLA and NFU membership services
Click the logos

      



    Read more on:
  • News

MMC milk price data flawed unions

16 July 1999
MMC milk price data flawed — unions

KEY milk price figures in the recent Monopolies and Mergers Commission report on the supply of milk in Britain are flawed and should be re-examined, say farming unions
… more …



todays news



 on GM crops – CLICK HERE

Euro1 = £0.6513 £1 = Euro1.5354 
Help a child and win a Fastrac
ADAS, CLA and NFU membership services
Click the logos

      



    Read more on:
  • News

MMC milk price data flawed unions

16 July 1999
MMC milk price data flawed — unions

By Robert Harris

KEY milk price figures in the recent Monopolies and Mergers Commission (MMC) report on the supply of milk in Britain are flawed and should be re-examined, say farming unions.

Using these figures, the MMC report found that Milk Marque had exploited its monopoly position and consumers paid more for fresh liquid milk as a result.

This led trade secretary, Stephen Byers, last week to accept the recommendation that Milk Marques selling system should be changed, and to restrict further moves into processing.

“Of all the findings, the fact that consumers have been adversely affected is perhaps the most difficult to understand,” says Siôn Roberts, chief economist at the NFU.

“The fact the MMC found that Milk Marque was a scale monopolist by virtue of its 49.6% share of the market is not that contentious, even though its share has now fallen a further 10%. But there appears to be no evidence that consumers have paid higher prices because of this.”

The average farmgate milk price in the 12 months to April this year was over 20% lower than in the 12 months after vesting day in November 1994, says Mr Roberts. Over the same period, the retail price for fresh milk rose by about 2% (graph, right).

  Farmgate and retail milk prices

But the report, drawing on several studies from the Dairy Industry Federation and Express Dairies, as well as the MMCs own statistical analysis, concludes that for every 1ppl change in the farm price, the retail value changes by about 0.5ppl in the medium term.

“Using the data between November 1994 and April 1999, we can find no statistically significant relationship between the MAFF farmgate price for milk and the retail price as published by the Central Statistical Office,” says Mr Roberts.

All the evidence is in the report, says Jim Begg, director general of the DIF.

“The MMC was looking at two things in particular, whether the price was higher than it would otherwise have been, and, if so, whether that increase gets through to the consumer.

“The MMC found the answer was yes in both cases. Its decision was based on very detailed econometric analysis.”

That decision should be accepted, he says. “Rather than looking back, we should all look to the future. The MMC has set out actions, and so have ministers.

“The concern should be to make sure they are implemented, to ensure we get a fairer selling system, and fair milk price. We must start working together to take on the competition.”

But the Scottish NFU wants the whole milk marketing chain investigated. “Scotlands parliament must investigate who is benefiting from these rock bottom prices.

“If it is not consumers, it is certainly not producers,” said vice-president, Peter Chapman.

    Read more on:
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