15 April 1998
NFU calls on Milk Marque to end the 90% rule
By FWi staff
THE National Farmers Union has called on Milk Marque to scrap its 90% rule for the July selling round, following the continual fall in farmgate prices.
Milk Marque introduced the so-called 90% rule in 1996 as part of a package of measures in response to concerns expressed by the Office of Fair Trading about the co-operatives selling system.
It was hoped that the 90% rule would prevent Milk Marques selling system being referred to the Monopolies and Mergers Commission (MMC).
But now that the MMC is looking into its operations, the NFU argues that the 90% rule should be abolished until the commission hands down its findings in October.
NFU president Ben Gill said an October ruling was too long to wait for many producers who are “already gasping for breath”. He said many farmers viewed the 90% rule as a major obstacle in the path of fair prices.
Under the rule, Milk Marque is required to open a further round of bidding if the farmer-owned co-operative receives bids for less than 90% of its total milk available for sale (excluding forward contracts).
Milk Marque was forced to offer an unprecedented fourth selling round in the first quarter of this year after processors failed to take-up its supplies. Milk prices are currently at 18-18.5p per standard litre. The last time prices were this low was in the early 1980s.
“The situation facing the milk sector is severe with prices paid to producers plummeting by 25% over the last 18 months,” Mr Gill said.
Paul Beswick, the newly appointed chief executive of Milk Marque, conceded that farmers dont think the 90% rule is a fair system, but said discussions would have to take place before changes were made.
“There is absolutely no doubt that members are facing a severe situation and that our customers have misgivings about the selling system,” he said.
Mr Beswick replaced David Yeomans as chief executive following Mr Yeomans shock resignation last week.