United Milk recruits to supply Westbury

By Robert Harris

UNITED MILK is stepping up its recruitment campaign to secure up to 1 billion litres a year of direct supply milk by the end of 2002.

The company wants the equivalent of 450m litres of milk a year by next May when its new butter/powder factory in Westbury, Wiltshire opens – the breakeven figure for the new 45m plant.

However, the site will need an annual intake of 800m litres of milk at full capacity to make 75,000t of specific skim milk powders for premium ingredients markets and 40,000t of butter.

UM expects to secure this, and a further 25% to supply other markets, by the end of next year, says chief executive Don Morris.

The farmer-owned plc had 150m litres contracted to the business from 110 farms by 01 April. This is sold to Arla Foods and West Country cheese producers, or toll-processed through Wyke Farms.

The UM board is confident it can reach its target. “Our membership represents a total output of 650m litres and we hope to have that committed to UM by next summer,” says Mr Morris.

There are several benefits for farmers, he maintains.

By supplying what UM describes as one of Europes most efficient dairy processing businesses, shareholders will see their investment grow.

They will also receive a share of the profits. And all farmers, whether they choose to invest or simply supply milk, will benefit from a competitive milk price, he says.

The company revises its prices each month, and is paying 20.1ppl to producers during May. That is 0.6ppl more than the previous month, reflecting recent deals with processors and liquid milk buyers, says Mr Morris.

UM will remain competitive when it starts processing its own milk, adds chairman, Richard Ashworth.

“There is a stigma about butter and skim milk powder. Producers dont think it can match the liquid milk market and it is always regarded as the home of last resort in the UK. But it is a very real market – a lot of countries take it very seriously.”

He believes that lower production costs – UM reckons it will process milk for under 2ppl through its new plant, less than half the industry average – mean the price paid by UM for milk going into its plant will compete with premium markets.

Even though liquid milk will always have first call on supply, premiums are usually very small, says Mr Morris.

“Only in times of shortage will they become significant.”

If that happens, UM can broker milk to take advantage of higher prices, he adds.

Conversely, if the milk price falls to support levels, the company will pay a guaranteed minimum price of 1.3ppl over the intervention milk price equivalent, says Mr Morris.

“And we do have phase 2, which will be looking at added value products – we are building a total dairy business.”

The second phase is earmarked for the 14 acres of the 30-acre site at Westbury remaining after the butter/powder plant has been built.

Although UM has something of a “rich mans club” reputation – the average supplier currently producers over 1.3m litres a year, more than twice the national average – farmers of all sizes are being sought, says chairman Richard Ashworth.

“We are seeking members in Devon, Somerset, Dorset, Wiltshire, Hampshire and Gloucestershire.

“While collecting milk from large herds makes sense, as it makes the process more cost-effective, it makes no sense to drive past smaller herds which can top up tanker loads.”

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