8 October 1999

Should Milk Marque split?

YES:Fred Spurgeon

I never wanted to write this article. At deregulation, farmers had the opportunity to co-operate to build a future together. That thousands did so in Milk Marque is a tribute to their determination.

We have had some hard lessons in the past five years, not least the temptations of the penny plus which have proved too much for some. But in Milk Marque, we had a successful example of co-operation on a large scale and a firm foundation to build for the future.

The MMC report has changed all that. At a stroke, Milk Marques commercial strategy has been declared anti-competitive. Another way simply must be found to meet the legitimate needs of dairy farmers for a fair price and a secure market for their milk.

Only half the milk produced in this country is needed for the liquid market. The rest is manufactured into products which are oversupplied, vulnerable to overseas competition and by no means perishable.

The position we hold in the market must be addressed and in the light of the MMC report, the restructuring of Milk Marque provides enormous opportunities previously unavailable to us because of competition law.

Milk Marque has been extremely successful in two important ways. First, it has ensured every litre of its members milk has been sold in an oversupplied market. Secondly, Milk Marques distribution team has made huge savings in transport costs, despite large rises in fuel duty. The skills which have brought about these achievements will be needed by the new co-operatives.

They will start with some major advantages. They will have freedom to negotiate individual contracts with customers according to the level of service required and the twice yearly selling round, which has caused such acrimony, will become a thing of the past.

There is great determination among Milk Marque members to add real value to their milk and this at last provides a chance to move forward. Processing for the sake of it would make no commercial sense. But the new co-ops must seek out new markets and new partners to build long-term, sustainable integrated businesses.

Overall, I expect this restructuring to bring about a genuinely free market which responds more quickly to the needs of the consumer and gives a fairer return to the producer.

For the past year, I have served as and have represented the Ribble and West Pennine district since vesting day. For personal business reasons, I have decided not to seek election to the board of the new northern business.

However, I will continue in dairy farming and know that – for all the reasons outlined above – my future is to be part of this new business. That is why I will be voting in favour of Milk Marques restructuring proposals and why I urge all members to do the same.

NO: Gwyn Jones

IT is unbelievable that farmers should even be entertaining the idea of splitting Milk Marque.

No primary industry is fragmenting anywhere in the world. Indeed they are all amalgamating. Europes farming co-ops and processors are getting bigger, and supermarkets are getting bigger.

Wal-Mart and Carrefour are arriving here with the sole intention of gaining market share through cheaper food prices, and we are being asked to split the only organisation we have with any size into three!

I have spoken to many people, whose views I respect. All believe that in three to five years we will all be back together, due to one or a combination of three reasons.

The NFU will win its judicial review; the industry will be in such dire straits; or one or more of the successor co-ops will fail and be taken over by the others. Do we want to spend £20 million in order to cause such mayhem, only to end up where we would be if we stood and fought?

The government should not be let off the hook so easily. We all know that the MMC report (and it is a thorough, balanced and detailed report) was a nonsense because of its terms of reference and timing.

The Minister covered his back by accepting it, but he stated that he was against the compulsory break-up of Milk Marque, knowing that with pressure applied later, we would do it ourselves. The glowing way that the government (and the trade) has accepted the proposal to break up Milk Marque is testimony to their relief.

Principles do not change. We do need a national co-op that has strength in the market place.

The last thing we should do is throw in the towel and waste our assets. Restructuring into three co-ops will be open to manipulation by the powerful processing companies, and the co-ops will compete against each other for business.

My final reason is that I am utterly convinced that donkeys will run the area co-ops. We failed to break with the past when Milk Marque emerged from the old MMB. We were told that it would be a sharp, commercial operation, run by commercial business people. We were conned.

Top commercial people should run a co-op, recruited from abroad if necessary. These should be offered proper salaries by people who know the business. Farmers should be locked out for their own safety.

The break-up of Milk Marque is the removal of the final obstacle on the road to a trade dominated industry.

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Gwyn Jones is partner at Crouchlands Farm, Billings- hurst, West Sussex, and milks 500 cows.

Fred Spurgeon milks 80 cows on 220 acres at Bashall Eaves, near Clitheroe, Lancs. He is chairman of Milk Marques north of England area council

Milk Marque managing director Paul Beswick and his board are pushing to form three susccessor co-ops as soon as possible. What do farmers think?