Prices to rise in milk shake-up: Float of Dairy Crest will mean a bonanza for farmers as marketing board is broken up

The price of a pinta is poised to rise following the Government's approval of plans to break up the Milk Marketing Board, which has controlled the supply of milk for 60 years.

Gillian Shephard, Agriculture Minister, said she saw no reason for the price of milk to go up. But Andrew Dare, chief executive of Milk Marque - the successor to the MMB which is expected to be responsible for selling 80 per cent of milk production in England and Wales - said he expected a slight increase.

'But I do not think it will be miles beyond the rate of inflation (currently 2.6 per cent)', he said.

That echoed the view of Ross Buckland, chief executive of Unigate - which buys 14 per cent of milk production - earlier this week. He expected price rises to be below 10 per cent, and he hoped the increase would be temporary.

The reforms will, however, mean a bonanza for farmers. They will be given free shares in Dairy Crest, the MMB's milk processing and manufacturing company, which is due to be floated off later this year. The number will depend on their milk production in the year to April 1993.

Dairy Crest could be valued at pounds 250m which, after the cost of the float and the pounds 39m to be retained for establishing the new system, could give each farmer an average of about pounds 7,000.

They will also be given certificates of entitlement to Milk Marque, which could be worth a further pounds 1,000 each.

Under the present system, the 29,000 farmers in England and Wales have to sell all their 11 billion litres of milk to the MMB at a current average price of about 22.5p a litre. The MMB then sells the milk on to dairies and food manufacturers. Selling prices are negotiated between the MMB and the Dairy Trade Federation, which represents purchasers, and will vary depending on the end use.

The MMB has to give priority to milk for drinking so when production is low it takes supplies from cheese and butter makers to ensure the liquid market gets enough.

Under the reforms agreed by the Government yesterday, from 1 November farmers will be allowed to sell to anyone, while dairy companies will be allowed to buy direct from farms. The price will be negotiated between buyers and sellers, and there will be no requirement to satisfy the liquid market. But Milk Marque will set its prices and contracts depending on whether customers want a guaranteed supply, or are prepared to take less if required.

Approval of the scheme will set off a rush to sign up farmers by Milk Marque, dairy companies and farming co-operatives. Northern Foods, Britain's largest milk supplier, is asking farmers to join the Northern Milk Partnership, which it hopes will supply a large part of its 2 billion litre annual requirement. And it is guaranteeing to pay a premium over the price offered by Milk Marque.

Milk Marque, however, has already signed up half the farmers - although it is allowing a 14-day cooling off period in case they want to change their minds - and hopes eventually to sign contracts with between 75 and 80 per cent of milk producers.

That has angered dairy companies, which believe the MMB is simply being replaced by another monopoly, but with no safeguards to prevent Milk Marque abusing its position. At the moment, either the MMB or the Dairy Trade Federation can call in an arbitrator in pricing disputes but the new regime will have no such controls.

The dairy industry says that is untenable when European quotas mean that Britain can produce only 85 per cent of its annual requirement. 'We think it is quite unacceptable to approve a private monopoly, which says it is to control 70 to 80 per cent of the milk market, when the market itself is undersupplied,' said John Price, director general of the DTF.

View from City Road, page 31

(Photograph omitted)

Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments