Meeting to put Dairy Crest flotation back on track

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The Independent Online
THE FLOTATION of Dairy Crest, the milk and cheese food manufacturer, is set to be put back on track today following a crucial meeting between its current owner, the Milk Marketing Board, and the Ministry of Agriculture, Fisheries and Food.

The pounds 250m flotation, which was intended to take place next month, has been delayed because Maff was unhappy about proposals for the break-up of the MMB.

However, insiders suggest that Maff and the MMB will settle their differences at today's meeting, allowing the Dairy Crest flotation to proceed. Dairy Crest needs agreement about the MMB break-up but its structure and prospects are unaffected by the negotiations with Maff.

Maff - with backing from the competition authorities of the European Union - was unhappy about two things.

Firstly, it did not like the proposed financial compensation package for dairy farmers - who ultimately own the MMB co-operative - after the split.

Dairy farmers will be able to choose whether to stay with the MMB's co-operative successor - called Milk Marque - or to join forces with one of the commercial milk processors such as Northern Foods or Unigate that are lining up to break the MMB monopoly.

If farmers contract to supply Milk Marque, their stake in the MMB will be transferred to the new organisation.

If they choose to link up with one of the rivals they will receive a fixed-term interest-bearing bond, a so-called 'certificate of entitlement.' The MMB's original plan envisaged that the bond could be cashed in after five years but Maff wants to shorten the payout period.

Secondly the ministry is pushing the MMB to hive off two small farm services subsidiaries - Genus, an artificial inseminator, and National Milk Records, the milk test laboratory. If the ministry gets its way the MMB will be left as purely a milk trading company similar to the rival commercial milk-supply operations.