1 November 1996

Obstacles to progress

QUOTA restrictions, Milk Marques selling system and the barriers it places between producers and the market-place are the three obstacles preventing the UKs dairy sector from competing at the highest level, the Dairy Industry Federation claims.

Gordon Summerfield, DIF president, said quotas should be abolished but at a sensible pace with the readjustment in price levels that would lead to a more globally competitive industry.

Speaking at the DIF annual lunch in London on Tuesday, Mr Summerfield said farmers were too often still not producing the type of milk demanded by consumers.

"There is a lingering belief that farmers should produce whatever milk they wish and leave dairies to turn it into saleable products. That may have worked in the past, but not in the open markets of the 1990s."

Mr Summerfield singled out Milk Marques arcane price setting system, claiming it bore little relation to the market. He also criticised Milk Marques linking of service and price.

"The system still does not work equitably and we must change it. When prices are too high, factories are forced to close, companies go bust and investment moves abroad. When prices fall, rarely do factories re-open."

Mr Summerfield welcomed the Office of Fair Tradings decision to cap MMs opening prices for each selling round, ensure greater transparency in the selling process and maintain a short-term spot market for milk.

Gavin Strang, Labour shadow farm spokesman, shared Mr Summerfields view that the EUCommission would have to cut the protectionism of the Communitys milk regime, which currently costs EU taxpayers more than £3bn a year.

Dr Strang said the budget costs needed to be cut through the phasing out of state intervention buying and the subsidisation of exports. &#42