Transport share scheme may cut milk costs for all
By Robert Harris
MOVES to drive down milk transport costs and return savings to farmers are being discussed by dairy processors and several farmer co-ops.
The proposed scheme, which would see rival companies share tankers on common routes to cut wasted journeys, could be running within a year.
Richard Smith, chairman of Express Milk Partnership, says transport is one factor affecting milk prices that companies can tackle.
"There are three major pressures: The weakness of the k, which is now at a 30% disparity to the £; weak commodity markets; and the extremely high cost of transport.
"It does not make sense to have three or four tankers crossing one another. But change will need a lot more co-operation. We are looking to the three new groups (Axis, Milk Link and Zenith) to see how we can rationalise that situation."
Roger Metcalf, of Agrifood Consultants, reckons transport is costing the three new co-ops 2.5p/litre, including administration and other costs. Of that, ex-farm collection accounts for about 0.7p/litre, and secondary haulage, including reloads, from depots to factories, a further 1.8p. Express costs are likely to be half that total.
"We are not talking about massive savings here. But if you can save 0.2-0.3p/litre, that can go straight into the farmers pocket."
Neil MacFarlane, Milk Links operations director, agrees, talking of a 25% saving on routes where there are "irrational operations". "Compared to the base price, that is a lot of money. And there is only one person paying for the haulage, and that is the dairy farmer."
The firm has already exchanged data with several dairy processors, he adds. "We are evaluating this at the moment. We are working up costings, ready to go for it."
But savings must be clearly identified first, he adds, to help overcome old prejudices whereby some farmers refuse to allow dairy processors tankers in their yard.
Axis and Zenith both describe joint haulage initiatives as a key way to cut costs. "Express is using language very similar to our own," says an Axis spokesman. Zenith is already holding "exploratory" talks with several customers.
David MacBean, chairman of the south-west NFU milk committee, was encouraged by talk of rationalisation at a recent meeting with the dairy trade.
"There could be savings of at least 1p/litre if we stop the nonsense of three lorries all going down the same lane to collect milk for three different companies. The impression we got at the meeting was that Milk Marque would never look at cross-transport." *