DAIRY farmers are deluding themselves if they believe Milk Marque can
deliver on its promise of security through market dominance and better
milk prices, according to leading industry commentator Barry Wilson,
publisher of the Dairy Industry Newsletter.
The best thing the Government or the Office of Fair Trading could do
for milk producers is to scupper the fledgling organisation as soon as
possible, he told around 200 delegates at the Bodfari Producers'
''Marketing milk more profitably'' conference.
He emphasised: ''I fully understand that many producers want to
support Milk Marque for reasons of security. Just as I can appreciate
why the MMB is so keen to transform itself into Milk Marque. After all,
great institutions do not voluntarily commit suicide.
''However, dairy farmers should not be fooled into thinking the idea
can work. Andrew Dare is doing a wonderful job of selling Milk Marque,
promising a continuation of the MMB's security, but with a much better
milk price.
''If you all join Milk Marque, he is in effect saying we will
certainly have market dominance, and I guarantee we will abuse that
position by whacking the milk price up.
''This is clearly irresponsible. The OFT and the MAFF have already
told Mr Dare that he will not be permitted to do this, but he is still
telling milk producers that this is what they will be able to achieve. I
believe he is doing this simply to get the maximum number of producers
signed-up with Milk Marque, regardless of the consequences.''
Mr Wilson explained to delegates that the two central planks of the
proposed national co-operative -- market dominance and maximum producer
returns -were irreconcilable. While the Office of Fair Trading and EC
competition authorities have no objection to market dominance per se,
the notion that anyone can dominate the market and then proceed to
exploit this position to maximise price, is the very thing they were
established to prevent.
''We hear a lot of flannel from the MMB and others about unity and
strength. But in a market dominant position, unity is in reality
weakness, because if you attempt to maximise returns you will fall foul
of the fair competition rules.''
Mr Wilson continued: ''My other big problem with Milk Marque is that I
cannot see how it will work. Contrary to what they have told us, Bob
Steven and Andrew Dare have been told by Brussels, Whitehall, and the
OFT, that they will not be free to wheel and deal with individual
buyers. ''But I ask myself -- is this possible? Firstly, how does a
dominant seller price his product if not by a formula system. And how
does a market dominant Milk Marque allocate milk? Again this will have
to be done on a formula basis.
''Milk Marque has come up with a system of service contracts, but I
still fail to see how this can be operated to completely clear the
market on a fair and equitable basis.''
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