2 June 1931

Proposed milk merger is all set for a member yes vote

By Olivia Cooper

THE proposed merger of Zenith Milk and The Milk Group looks set to get members approval at a special meeting on June 10.

David Stern, chairman of The Milk Group and chairman designate of Dairy Farmers of Britain, as the new co-op will be called, said members attending briefings on the merger had responded very positively. "Im confident that we will get a yes vote."

Members have 21 days to consider the recommendations after a formal circular was sent out last week. Approval from at least 75% of voting Milk Group producers and 66% of Zenith suppliers will be needed for the plans to go ahead.

If this happens, the co-op, which will account for 18% of the UKs raw milk supply, will start trading on July 1, and will waste no time in looking for ways to expand into processing.

Speaking at the National Agricultural Centre, Stoneleigh, last week, Mr Stern said: "Under the proposed financial structure, the new business will have the ability to unlock substantial amounts of capital and act quickly to make the right investments in processing."

DFB will take 0.2p out of each litre of milk, and split it between a 13th milk payment, individual members accounts and the general reserves. Members have also been invited to give a voluntary 5p/litre guarantee or 1.25p/litre loan. This, along with £7.5m of capital from Milk Group and Zenith shares, could guarantee a bank loan of £145m for DFB to invest.

While just 5% of the joint milk supply is currently processed in-hand, the company expects this to expand to about 50% over the next few years.

&#8226 This months Milk Price Review contains several changes.

From now on, companies will be ranked by the 12-month rolling average price, rather than monthly price. This will avoid big changes in the rankings, which are often caused by differences in the timing and level of seasonality payments. The new arrangement will provide a more consistent and fairer comparison of company payments.

However, the table will continue to reflect seasonality in the monthly price columns.

We have also increased the volume component of the farmers weekly standard litre, from 1101 litres/day to 1501 litres/day, to reflect increasing herd size.

To simplify the table, we have taken out footnotes highlighting contract information. Details of individual contracts are available on farmers weekly Interactive (details of how to obtain them are included at the bottom of the table).

This, the first table of the milk year, reflects the many significant price cuts reported for April in recent issues of farmers weekly.

In simple average terms, ignoring seasonality, milk prices fell from 19.04p/litre in March to just 17.45p/litre in April, a drop of 1.59p/litre. &#42