Milk scheme challenged: Brussels questions transfer of MMB assets and marketing role

BRITAIN may face a new clash with the European Commission in Brussels, after doubts were raised about plans to abolish the Milk Marketing Board.

The Commission said yesterday that it had opened a competition inquiry into the issue. It said that though it was pleased to see the end of the MMB's 'virtual monopoly', it was concerned about the terms of the transfer of the board's assets to Milk Marque, which will replace it.

The scheme, which has still to be approved by the Minister of Agriculture, would see Milk Marque taking over the assets and many of the functions of the MMB, including the collection and marketing of milk. The Commission raises questions over the legality of the move. 'The Commission doubts whether the transfer of certain MMB assets to Milk Marque is compatible with an open market,' it said.

It was also critical of a new system of 'certificates of entitlement' to be given to milk producers. 'These arrangements will not reflect normal market conditions but will violate the open market principle,' the Commission said.

The certificates would replace a quota system.

Gillian Shepherd, the Minister of Agriculture, is currently considering the MMB's proposals for transferring to the private sector and the board had hoped for a response by the end of the month. The European Commission's inquiry could delay that.

The MMB had originally intended that dairy farmers who did not want to join Milk Marque would not be granted entitlement to certificates, but that had been changed following consultations with the EC and the ministry.

Privatisation of the MMB also involves the flotation of Dairy Crest, the board's marketing and sales arm. Proceeds of the flotation - likely to be significantly larger than the pounds 50m estimated value of the certificates - would be divided between Britain's 28,500 farmers.

No one from the MMB was available for comment last night.