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Signs of 1-2ppl milk price rise

- 06 October 2000
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By Robert Harris


PRODUCERS may have to wait for a week or two yet before they find out how much more their milk is worth after milk price negotiations between farmer co-ops and buyers end.


Neil MacFarlane, operations director for Milk Link, believes the milk market in his patch – south of the M4 – will bear rises of 1-2ppl.


“Virtually all our price discussions for October are finished, but we have one or two big contracts to put to bed.


“Our ongoing contracts indicate that the milk market has certainly moved ahead by a good 2ppl in the West Country,” he says. “And I think 20ppl is a reasonable spring price for farmers, not the 16p they currently receive.”


It is the clearest indication yet from any of the Milk Marque triplets as to what price their members, who account for about 35% of UK milk production, might expect.




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Recent action by most supermarkets to pay 2ppl more to processors will help. Other shop outlets and catering could also absorb such a rise, says Mr MacFarlane.


And butter and milk powder markets remain buoyant, translating into a raw milk price of 19-20ppl, he adds, a contrast to claims by some processors that such markets can only support an increase of 1ppl.


Axis and Zenith, the other Milk Marque descendants, are also still negotiating. Zenith is holding its October price, worth about 16.7p for a standard litre, and will pay any increase as a flat-rate monthly bonus.


“Two pence a litre is out there, but plenty of buyers are offering less,” says a spokeswoman.


Axis is increasing its October milk price by 0.2p to 16.7ppl, based on early talks with buyers. Further bonuses will be paid pending the overall outcome.


Tesco chilled foods director Jacqueline ONeill told producers at this weeks Dairy Industry Dinner at Shepton Mallet, Somerset, that even the best producers could not cope with prices which had fallen one-third in three years.


“Any industry under pressure rationalises. But there is a fear it is happening too fast for those staying in to take up from those quitting.”


Tesco is of one of the retailers to recently pass a 2ppl increase to processors.


“Supermarkets need suppliers to be profitable. We want them with us for the long term. Weve listened to the concerns of farmers groups and passed them on to processors.”


Meanwhile, the NFU has slammed “insulting” announcements on milk prices, describing Dairy Crests intention to pay just 1.4ppl more from October as “derisory”.

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