15 April 1998
NFU calls on Milk Marque
to end the 90% rule
By FWi staff
THE National Farmers Union has called for the suspension of the 90% rule in Milk Marques next selling round in July following the continual fall in farmgate prices.
The NFU argues that the 90% rule was seen by many dairy farmers as a major obstacle to receiving a fair price for their milk.
The so-called 90% rule was introduced in 1996 as part of a package of measures in response to concerns expressed by the Office of Fair Trading over the operation of the Milk Marque selling system.
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,” said NFU president Ben Gill.
The Monopolies and Mergers Commission is currently investigating Milk Marques selling system, and is due to hand down its findings in October.
“But this is too long to wait for many producers already gasping for breath,” Mr Gill added.
He is advocating that the 90% rule be scrapped in the interim until the MMC hands down its findings. The NFU has submitted its formal response to the MMCs inquiry and will be given a further opportunity to put forward its case on 1 June when the commission takes oral submissions.