Milk producers await report on deregulation

By FW staff

UK dairying is coming to the end of its “transition period”, and publication of the Competition Commissions report in the next few weeks will mark a new beginning for the deregulated market.

Speaking at this weeks Agra Europe dairy conference in London, Milk Marque managing director Paul Beswick said that, unlike other industries, the dairy industry had gone from regulation to deregulation overnight.

“When we look back on the past five years we will look at it as the transition phase,” he said. “The real change is in front of us now.”

Trying to predict the outcome of the commissions inquiry was impossible, Mr Beswick added. “The report is leak proof.”

But of the four options spelt out last October, changing the selling system was the most viable.

A Northern Ireland-style monthly auction was not ideal, given that Milk Marque sold most of its milk on longer term contracts and faced more complex haulage logistics.

One to one negotiations with customers, as occurred last January, would be better.

Breaking Milk Marque up into smaller groups was unnecessary, said Mr Beswick. Milk Marques share of GB supplies had slipped from 59% at Vesting day to just 39% now.

“From 1 January next year, the new Competition Act will bring us into line with Europe where a 40% market share is considered dominant,” said Mr Beswick.

He stressed several times the need for Milk Marque to become even more customer focused and to throw away the politics of the past.

But farmers had to be allowed to work together and to process their milk, to make sure there was always a home for it.

This last point was contested by Jim Begg, director general of the Dairy Industry Federation. “We have no problems with a normal, Continental co-op situation, where farmers process their own milk.

But its a very different thing when dairies have to buy their milk from a supplier which is also doing its own processing.”

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