Competition law problems are holding back the UK dairy industry

Dairy competition law problems are not a myth, Dairy UK has told the Scottish Parliament’s Environment and Rural Development Committee.

In evidence to the Food Supply Chain Inquiry being conducted by the committee, Dairy UK said that application of competition rules must recognise that the dairy sector operates in a single European market and that UK companies and co-operatives must be allowed to develop to the scale of their European counterparts.
Kirk Hunter, director of Dairy UK Scotland, said: “In Scotland even minor acquisitions have been subject to scrutiny by the competition authorities.

“The stance of the OFT is creating confusion on how the industry is to carry forward necessary rationalisation and consolidation.

“The entire dairy supply chain needs to be able to develop the efficiencies of scale necessary to make the sector more internationally competitive.

“We welcome the interest of Scottish Ministers and the Committee in these issues.”
In its written evidence Dairy UK outlined a series of measures that could improve the dairy supply chain performance.

They include: –
• Closer integration of the Scottish Executive’s Forward Strategy for Agriculture and Scottish Enterprise’s Food and Drink Strategy. The overall strategy should emphasise the need to attract new and maintain existing processing capacity in Scotland to provide critical mass of activity and the cohesion of long term security of markets for milk producers.
• Benchmarking with other food supply chains both in this country and overseas and adoption of good practice in terms of supply contracts, stable pricing structures from primary producer to retailers.
• A collective voice for food and drink supply chains in their dealings with the Executive, the Scottish Enterprise structure and other public sector agencies.
• The Executive and the public sector generally have a role in assisting the dairy supply chain through public procurement policies. Markets such as school milk, local authority, hospital, and prisons are important for the dairy supply chain.
• The industry must contain cost increases if it is to remain competitive. The Executive needs to minimise/be aware of costs imposed upon the Industry through Government action – environmental, legislative and should as a matter of policy avoid “gold plating” legislation from Brussels.

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