MMCto investigate whole milk process

1 May 1998

MMCto investigate whole milk process

THE big differential between producer milk prices and the retail price of a pint will be investigated by the Monopolies and Mergers Commission as part of its inquiry into the milk market, according to the NFU.

Phil Hudson, NFU milk adviser, said people seemed to be under the illusion that the MMC inquiry would just investigate Milk Marques selling practice. But the MMC had said it would look into the whole milk selling process, and that meant they must look at the whole production chain.

"In my mind that means they will have to look at retail prices," said Mr Hudson. MAFF confirmed that the MMCs inquiry had a loose and broad remit. "As far as we are concerned the inquiry is framed in fairly broad terms and they could look into just about anything," a MAFF spokeswoman said.

In its evidence to the inquiry, the NFU has highlighted the changes in the retail price of milk compared with the lower price received by producers.

It has told the MMC that on the basis of the MAFF monthly survey of milk prices in the UK, producer milk prices fell by 4.35p/l between December 1996 and December 1997, and as expected fell a further 1.8p/l, following the Jan 1998 Milk Marque selling round. But retail price index data showed retail milk prices fell by less than 2p/l.

The figures prompt the question who is pocketing the extra 4p/l differential? Supermarkets are often the target of producer anger. But the NFUs evidence says that "while some of the retail milk price margin may have been taken by the food retailers some dairy processing companies, particularly those with doorstep delivery, would also have enjoyed this windfall."

MPs are also applying pressure for the MMC to investigate the retail market. &#42

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