Milk producers fear another price drop

14 July 1999

Milk producers fear another price drop

By Vicky Houchin

Wednesday, 14 July, 1999

DAIRY processors are planning to pay less for milk in the wake of last weeks Monopolies and Mergers Commission (MMC) report into the milk selling system.

The question on many producers lips is not so much whether prices will fall but by how much.

“The poor old farmers can expect another milk drop,” said one well-placed source within the industry.

Today, Express Dairies refused to confirm reports that it is considering a 0.6ppl reduction in its milk price from next month.

But an Express spokeswoman admitted the company was in talks with one of its milk groups in the north-east and west of England but acknowledged the market for milk had got weaker since the last selling round.

Similar reports that the Waterford Group is to reduce its milk price by 1.3ppl also remain unconfirmed.

Ian Powell, dairy team manager with ADAS, said it was very disappointing to read that milk prices were too high when values had fallen 25% in the past two years.

Other industry analysts expressed concern that dairy farmers would be unable to increase their profits unless Milk Marque was allowed to process more milk.

“If Milk Marque is charging too much for its milk [then] wheres the excess profits going,” said one dairy consultant.

“Unless Milk Marque comes up with a way to increase values soon their members wont be on a good price,” he said.

Unigate also declined to rule out the possibility of a price reduction, saying it would have to look at the market place.

A spokeswoman for the company said she was unable to comment at present as a decision on future pricing had yet to be made.

At Nestlé, senior buyer John Baverstock, said he was unsure whether the downward pressure on the milk market was being reflected in current values. “Im not sure it is,” he added.

But Mr Baverstock ruled out any price reduction next month and said he had assured his producers that a reduction was also unlikely in September.

However, he warned that Nestlé would have to remain competitive.

Ian Cameron, farm liaison manager with MD Foods said it was holding prices for the next three months and would then review its payment structure.