Milk co-ops all about balance…

12 October 2001

Milk co-ops all about balance…

As milk price negotiations

enter their final phase, we

ask a co-operative and a

direct supplier which will get

the best price for producers

CO-OPERATION in the UK dairy industry is all about restoring the balance between the retailer, processor and producer along the supply chain.

In order to achieve this balance producers need to create significant marketing muscle, which has to be strong, proactive and, above all, effective.

Progress towards reform on an industry-wide basis is already under way. The Federation of Milk Producers campaign, set up to achieve co-ordinated and co-operative selling through fewer and much larger farmer-owned groups, has been very successful. Over 3000 direct sellers are making the move to co-operative marketing, and that figure is still rising.

Alongside this, the largest of the UKs producer groups are pushing ahead with major structural changes based on strong co-operative principles, with a major emphasis on adopting proven, vertically-integrated business models operating successfully on the Continent.

Co-operatives, which make up the bulk of milk supplies and processing on the Continent, are themselves a very heterogeneous group, and have adopted a variety of financial structures to suit their environment and producer ambitions. They range from small, traditional co-ops producing standard, commodity products to large, dynamic and highly responsive multi-national co-ops producing a wide portfolio of added-value consumer products.

The common thread that links them all is the fundamental principles of being user-owned, user-controlled and giving user-benefits. Farmers are the sole beneficiaries of their co-operative action.

One of their biggest strengths – which has greatest relevance to the weak negotiating position of UK producers – is the part that co-operatives play in milk pricing and in their ability to support the national price, particularly where a significant part of the milk pool is within their control.

Today, a little over 50% of UK dairy farmers market their milk through co-operatives, which lag behind our most successful Continental counterparts.

Inevitably, there are some costs associated with the ownership of co-operatives and, in some cases, a need for substantial producer investment to help fund processing and marketing activities. But this may be a small price to pay to regain ownership of your industry and to eliminate the risk of becoming mere suppliers of milk at the farm-gate.

The immediate challenge and opportunity for UK producers is to build on the groundswell of support created by the FMP campaign and to accelerate the move to co-ops.

which increasingly offer the only safe method of securing an assured market for producers milk and long-term sustainable future.

The Milk Group is now clearly established as one of the top four producer-owned groups and is growing fast. Including those starting on Apr 1 this year, the Milk Group has received over 600 contracts from producers wanting to join during this milk year.


* Support national milk price.

* Create vertically integrated businesses.

* Focus on getting the best milk price.

* Group farmers, not divide them.

David Stern, chairman of the Milk Group, says co-ops are fighting the corner for dairy producers in a competitive market-place.

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