Marketing move

16 April 1999

Extra from MM for organic producers

By Robert Harris

ORGANIC milk producers who supply Milk Marque will receive an extra 1.6p/litre for their milk from this month onwards.

That takes the price for a standard litre (4.15% butterfat, 3.35% protein with top band Bactoscan and cell count) to 29.95p/litre.

This is a stark contrast to the conventional milk price, which will fall by almost 1p/litre from May. It is due to demand outstripping supply, says an MM spokesman.

It means organic suppliers will receive a premium of 11.1p over conventionally produced milk, slightly more than the recently announced Sainsbury deal (Business, Apr 2), though that price is more or less fixed for five years.

The price hike is part of the new Milk Marque Organics package, which also offers technical support for members. Those in the process of converting will be eligible for an interest-free £1200 loan to be repaid in the first two years after conversion.

MM expects there will be "significant" growth in the organic sector, with the market growing several times over in the next few years.

Meanwhile, ADAS calculates that the recent MM price cut of 0.85p/litre for conventional supplies will cut the margin over purchased feed in the average Milk Cheque herd by £7800, or £58 a cow.

"This is a disaster for those businesses which, on average, will only just break even in the year to March 1999," says Milk Cheque manager Ian Powell. "The outlook (for this milk year) must be for the average farm to make a significant loss." Many farmers can still reduce feed costs, he believes. "The average purchased feed cost is £110/t. But there are still some producers paying over £130/t, while others are paying under £100/t. Reducing concentrate cost by £20/t, through better buying skills or new diet formulation, will help offset more than two-thirds of the loss from the lower milk price."

ADAS Milk Cheque results for February show milk prices slipped almost 1p/litre to average 19.24p/ litre. Daily milk yield was up 0.9 litres to average 23.1 litres a cow, though less was from forage – just 3.1 litres a cow, compared with 6.4 litres a cow last year.

Monthly MOPF was £84 a cow, down £4 on the year. The 12-month rolling margin was £1099 a cow, down £105. Margin over all feed for February was £62 a cow, £3 lower than a year ago. &#42

Wales, switch over

MORE Welsh dairy producers should switch to organic farming, says the boss of a leading American organic dairy company.

Mark Retzloff, senior vice-president of Horizon Organic Dairy, which has 22 manufacturers and distributors in nine states, made the call after announcing his company had bought Aberystwyth-based Rachels Dairy. The undisclosed deal for the leading organic yoghurt producer made millionaires of farmer/processors Rachel and Gareth Rowlands.

More than £850,000 has been invested over the last six years and sales rose by 36% in 1998. The firm now employs 48 people and its products are stocked by top supermarkets and independent retailers.

Mr Retzloff said Horizon had identified a strong market for organic dairy products in the UK and planned to expand production. But more milk was needed.

He claimed he wanted to develop Wales as a centre for organic dairy product processing. &#42

Marketing move

CHRIS Bird has been appointed director of sales and marketing at Milk Marque from May 1. The internal promotion follows Paul Plowmans decision to step down, though he will maintain a consultancy role. MM has a £1bn turn-over, marketing about 40% of UK milk to 200 dairy firm customers. &#42

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