Vertical integration key to dairy survival

23 September 1998

Vertical integration ‘ key to dairy survival’

INCREASED vertical integration has emerged as the favoured route to dairy survival at the Plunkett Foundations conference at Meriden, near Birmingham.

The market will only be willing to pay more by adding to the value of milk and dairy products, said Olle Hakelius, president of the European farm co-operative body Cogeca. He said this meant moving into processing.

He said: “Without an industry of their own, the bargaining co-operatives have difficulties in defending their members interests since buyers, especially if there are only a limited number of larger buyers, can use an aggressive price strategy in obtaining low prices.”

Mr Halelius said this farm strategy required substantial amounts of cash which could be raised in a number of ways, including through the stock exchange. He pointed out European co-ops, with a membership of 12.5 million, had a turnover of Ecu230 billion (£159bn) and employed 730,000 people.

Richard Ashworth, chairman of Oxford-based United Milk Producers, warned that the trend in British manufacturing industry towards outsourcing posed a threat to milk producers.

Mr Ashworth said: “Against the background of falling incomes and the threat of the processors growing power, farmers groups must invest in their future, get into a stronger position and they must address these issues urgently.”

  • The Herald 23/09/98 page 25

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