29 September 2000

Positive signs in lead up to October milk prices

By Philip Clarke

THE momentum for better October milk prices was maintained this week, with Unigate/Dairy Crest offering at least a 1.4p/litre rise.

This splits the difference between the 2p/litre increase declared last week by Robert Wiseman Dairies and the 1p/litre from Express.

A spokeswoman said that Unigate Business Deal producers would see the 1.4p/litre going entirely on the volume payment, which rises to 9.695p/litre. But it would be wrong to assume that all groups would be getting the same.

"Our prices will reflect the returns available from all the markets in which we operate," said a spokesman, adding that negotiations were still ongoing with some groups.

Farmers For Action said it was unimpressed with the 1.4p offer. "Dairy Crest admits the supermarkets will be passing the full 2p/litre back to them," said chairman Dave Handley. "We know the current market for dairy commodities is stronger and will stand an equivalent increase."

He warned of widespread milk dumping from Oct 1 if 3p/litre was not achieved. But such action is unlikely from the 85 producers supplying supermarket group Waitrose via Unigate/Dairy Crest.

These producers already receive the top Unigate price of 19.5p/litre, plus a 0.2p/litre Waitrose top-up. The supermarket has now agreed to pay them an extra 2p/litre via Unigate/Dairy Crest, and is upping its own bonus to 0.5p/litre. As such, suppliers will be receiving about 22p/litre from October.

"We have a long-term commitment to the British farmers who supply us and dont want our producers to go bankrupt when times are difficult," said Waitrose head of dairy buying, Richard Sadler.

Other buyers, including the three Milk Marque successor co-ops, Axis, Zenith and MilkLink, were tight-lipped this week about their October payments, with negotiations still on-going.

&#8226 Dairy co-op Axis is overhauling its milk pricing system with new collection charges, hygiene payments and seasonality scales.

The current £13.50 daily adjustment and £5.50 every other day collection (EODC) bonuses are being dropped, to be replaced with a volume-related system.

From next January, all producers will pay £7.50 for the first 300 litres, and those on every day collection (EDC) will face a further £6 charge. But above 1000 litres a day, producers will receive 0.6p on every extra litre they supply.

For a small producer on EDC there will be no apparent change – he will still pay £13.50 a day. But a producer supplying 1500 litres a day on EODC will be charged £7.50 for his first 300 litres, and will get an additional £3/day volume bonus. &#42