National supply co-op falters as Milk Link leaves
National supply co-op falters as Milk Link leaves
By Robert Harris
MILK Link has pulled out of talks aimed at creating a new national milk supply co-op.
The southern-based co-op, together with its northern counterpart Zenith, the Express Milk Partnership and Dairy Crest direct suppliers, had been exploring ways of bringing together up to 9000 farmer members supplying over 5bn litres of milk (Business, Feb 2). But, with well over a third of the UKs raw milk at stake, there was a concern that competition authorities were going to take a keen interest.
When news of the discussions broke last week, Neil MacFarlane, operations director of Milk Link, told farmers weekly: "We are actually talking to see what might work before we see the regulator."
But lawyers seemed to think that nothing would work. "The advice we were getting was that evolution, rather than revolution, might be the order of the day," Mr MacFarlane said this week.
The story also broke early, preventing the groups seeking confidential advice from the Office of Fair Trading, he added.
Other potential partners in the co-op still believe that the plan can work, said Richard Smith, chairman of Express Milk Partnership. "We are obviously disappointed that Milk Link has pulled out. No one underestimates the [competition] problem. But with two big processors on board, we believe it is still a runner." Zenith is also "determined" to explore opportunities for consolidation.
Milk Link has also announced plans to boost its financial muscle to allow it to move into processing, through joint ventures, partnerships or direct investment.
The company will give farmers more control over the business by revamping its management structure, moving towards a European-style co-op. A supervisory board of farmer directors will oversee a professional executive management team, which will work on strategy and investment.
"An amended constitution will allow capital to be raised from a variety of sources and retained within the business," said chairman, Jeremy Pope.
New Milk Link member Jim Kent, of Beechdean Farms, High Wycombe, Bucks, welcomed the move. "To achieve critical mass through joint ventures or investment, we dairy farmers have to invest in the best managers and let them manage to agreed strategy and objectives, historically not one of the industrys strong points." *