9 March 2001

Quit direct supply and join co-op, SW dairymen are urged

By Robert Harris

HUNDREDS of milk producers across Devon and Cornwall have been advised to resign from direct milk supply contracts and join southern co-op Milk Link.

Representatives of the six groups which make up Westcountry Milk Producers have recommended that their 780 members transfer milk as soon as possible.

WMP farmers produce about 500m litres of milk a year, mainly for Dairy Crest and Glanbia. WMP chairman, Matthew Rowswell, said: "Our members were unhappy with their weak marketing position. The new co-operative will be a strong, farmer-owned business, driving out costs in the supply chain to the benefit of producer members."

When the transfer will occur remains unclear. "Our members have a range of contracts with direct suppliers," says WCP manager Bryan Lewens. "We are talking to companies so we can manage the transfer to the best effect."

Milk Link sells about 1.4bn litres of milk a year from 3000 members. If all WMP members joined, it would have almost 2bn litres a year, about 14% of the UKs raw milk.

This is the latest in a series of moves by direct milk suppliers to move back to co-ops. At the end of February, representatives of midlands-based Association of Milk Producers, with 700m litres of milk, voted to join the Milk Group. And in January, the Association of Dairy Farmers in the north announced their intention to switch 1.5bn litres of milk to Axis and Scottish Milk.

Meanwhile, the Milk Group is preparing to enlist more farmers, flagging up its established processing facilities. The aim is to boost the annual milk pool from 800m litres to 3bn litres. Half the companys milk goes as fresh liquid milk, 22% as fresh products, 18% is sold as cheese and 10% as other products.

Fresh dairy products delivering consistently good and defensible margins are the key to profitable milk production, says chief executive, Robert Audas.

The Milk Group owns a majority shareholding in Nene Valley Foods at Peterborough and also bought Somerset-based Lubborn Cheese, a specialist producer of soft, Continental-style cheeses, last September for £7.5m.

"We are in an area where we are getting 10-20% market growth, and where we can gain additional market share," says Mr Audas.

Milk Group turnover, including milk supply services, which involves sales of 2m litres of milk a day to more than 30 processors, is expected to jump 22% to £120m in the year to the end of March. Operating profit is predicted to top £1m. &#42