Larger co-ops key to dairy industrys future
Larger co-ops key to dairy industrys future
THE dairy industry will not survive unless competition rules are changed to allow larger co-ops, said industry leaders at the Royal Association of British Dairy Farmers conference at Malvern this week.
Donald Curry, former chairman of the Meat and Livestock Commission, told over 100 delegates the Office of Fair Tradings stance on milk co-ops was unfair and inappropriate. "We need to be able to operate on the same level as the rest of the EU."
Mergers of co-ops to create significant market share are considered anti-competitive by the OFT, which disbanded Milk Marque in 1999.
Sir Donald called on the dairy industry to lobby the government to change these rules. He said producers should work together to create a united strength and voice within the industry, but added that farmers didnt have to be members of a co-op to collaberate with each other.
Jonathan Ovens, chairman of Express Milk Partnership, agreed closer working relationships between milk producers and processors were vital, but said history showed large broker co-ops did not work.
The industry needs to rationalise and work more closely with processors and consumers, he said. "But building more capacity into our processing sector is not the way forward."
Philip Turner, of New Zealand co-op Fonterra, reckoned the co-operative structure puts farmers in a strong position to maintain a competitive advantage. Fonterra, which covers 96% of Kiwi milk production, was formed last year in reaction to declining world prices.
Mr Turner expects world milk values to continue to fall and said costs must be kept down. "Comp- etitiveness is absolutely key."
David Shaw, chief executive of Ayrshire-based Sorn Milk, did not reckon cutting costs to the bone was the answer. He said the main problem was oversupply and called on farmers to stop blaming processors for low prices. "It is supply and demand that is wrong.
"If we produce to quota, were talking of a milk price of 16-17p/litre. If we are one week under quota, the price is 21p/litre."