10 July 1998

Unigate says MM selling system hampers growth

DAIRY giant Unigate wants to be supplied by "thriving, prosperous farmers", but believes the price it pays for milk is too high.

Speaking at the recent World Dairy Forum in Windsor, chief executive, Sir Ross Buckland, slammed Milk Marques selling system. "The way we buy and sell milk hampers our growth," he said. "The system is complicated and unpredictable, while the price bears little relation to the market."

Further liberalisation of world trade was inevitable and EU prices would have to come down so traders could compete without export subsidies, he added. But the 15% cut proposed in Agenda 2000 was not enough and processors would still be excluded from world markets.

Lower prices should be balanced with increased compensation to farmers, he maintained. "We would like efficient producers to continue to prosper."

Staffs milk producer, Bill Madders, described Sir Rosss comments as "predictable", though he accepted that Agenda 2000 was taking the industry in the right direction.

The real problem was the short-term crisis affecting dairy incomes, he said. Prices had fallen 7p/litre in the past 12 months – 5p due to currency and 2p due to marketing arrangements. The selling system would have to change, though the real solution was for producers to own manufacturing capacity to compete with the big plcs.

lEuropean optimism over prospects for growth in world dairy markets is misplaced, New Zealand Dairy Board executive, Graeme Milne, told the forum. "For the time being at least, market opportunities appear to be shrinking." In particular he pointed to the economic recession in South East Asia and the growing risk of political instability, which had hit demand hard.

His comments were in stark contrast to EU farm commissioner, Franz Fischler, who said markets would grow strongly and reforming the CAP was essential to ensure the EU increased its stake in them. &#42