Probe process area, MMC told

23 October 1998

Probe process area, MMC told

By Robert Harris

and John Burns

MILK processors and supermarkets, rather than producers, should be the main focus of the Monopolies and Mergers Commission inquiry into milk selling.

Speaking during a visit by MMC officials to Devon, Jim Barnard, Lib-Dem spokesman for Tiverton and Honiton, said: "The price of milk has shadowed the intervention price. That is most suspicious." Many small farms were under threat, he added. "The commission must stand up for the smaller trader, and the government must back them."

Accounts obtained from 40 south-west farms by Steve Hicks of Cullompton-based accountants Oakleys showed that profit margin a litre of milk last milk year was, at 0.16p/litre, one-tenth of 1996/97 levels.

"The supermarket price of most foods is higher here than the rest of Europe, yet the milk price is much lower, said Mr Barnard. "This is being done to destroy the doorstep delivery system. This is what should be investigated by the Monopolies Commission."

Farmer Bill Vellacott emphasised that the outcome could influence other farmers co-ops and marketing schemes.

"We are talking here about the principle that producers can get together to add value to their produce. If Milk Marque fails we can say goodbye to all other ideas."

Meanwhile, the milk processors body, the Dairy Industry Federation, said if an auction system replaced the current selling rounds MM should not be allowed to bid through its subsidiary processing companies.

"The DIF has a difficulty, in general terms, with vertical integration," said the federations director general Jim Begg. "It could mean that milk is removed to push the price up, preventing dairies from buying milk at a competitive, market-based price. I am not saying MM has done this, nor that it would do, but that it could do."

MM says there is no question of it abusing its processing capacity in this way. "All our factories have to purchase milk like every other customer – there is no preferential treatment," said a spokesman.

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