13 July 1998
High stakes poker for dairy industry price talks
THE first round of bidding in Milk Marques twice-yearly price setting auction, for deliveries beginning in October, concludes on Thursday.
Milk Marque is trying to push up its minimum price from 19p to 21.5p/l of raw milk.
Paul Beswick, Milk Marques managing director, would not be drawn on how the dairy farmers co-operative would respond if the level of bids was low.
Some analysts believe processors could simply stand back from the Milk Marque auction and depend on raw milk supplies from other sources while stopping production of long-life dairy products.
The Financial Times said if Milk Marque fails to agree long-term contracts with buyers it might be forced to sell on the spot market and be at the mercy of the market.
The Dairy Industry Federation warned that if buyers were discouraged from bidding because of the high quoted prices, this would be disadvantageous to farmers who could find they had no outlets to take their product.
But Milk Marque argues it has no options left, other than to try to force the price up, with farmers experiencing sharp falls in raw milk prices from 25p/l to 18p/l over the past 18 months.
The Financial Times describes the battle between Milk Marque and processors to control the price of milk as a “high stakes game of poker”. It says the game will by no means be over no matter who ends up holding the winning hand on Thursday.
- Financial Times 13/07/98 page 22