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UK milk processors clash over prices

02-Dec-2004

Robert Wiseman Dairies announced earlier this week that it is to provisionally slash the amount it pays for UK dairy farmers' milk, a move which will undoubtedly lead to further price skirmishes in the UK milk market, as Tom Armitage reports.

The move will lower the raw milk price paid to dairy farmers by 0.5p per litre - although the company claims it has committed to an immediate review of its milk pricing strategy should there be any upward movement in prices paid by its major processing competitors, namely Arla Foods UK and Dairy Crest.

Currently, Wiseman pays dairy farmers 19.16p per litre of milk, 0.8p more than its nearest rival Arla Foods UK, which announced price cuts in September earlier this year, and 0.1p more than Dairy Crest.

Graeme Jack, a spokesperson for Robert Wiseman Dairies told DairyReporter.com that "this is the first time we have scheduled a provisional milk price reduction," adding that "depending on the subsequent actions of our competitors we could effectively reverse the pricing decision."

"Despite repeated lobbying across the UK dairy sector, Arla has failed to reverse its September decision to lower milk prices, compromising on our ability to compete in the market," Jack noted.

"Arla broadly has the same share as Wiseman in the liquid milk sector across the British multiples - we can not understand its decision to continually drive down the prices it offers to farmers. We are disappointed," he added.

Arla Foods UK, a subsidiary of Danish-Swedish owned Arla Foods amba, which yesterday posted underlying profits of £42 million (€60 million), hinted that it would "review its own position in the New Year," although declined to answer further questions.

Following the decision to appoint Arla as sole liquid milk supplier to number three UK multiple Asda - a move which lost Wiseman and Dairy Crest lucrative supply contracts - relations between the two companies have become increasingly strained.

Arla has recently made significant structural changes to its organisation, following a merger with Express Dairies earlier this year, which will eventually result in a cull of 1,500 jobs.

Arla is also poised make an assault on Wiseman's dominance of the Scottish milk market, with the opening of its £16 million (€23 million) Lockerbie facility scheduled for next spring.

A spokesperson for Dairy Farmers of Britain (DfoB) declined to comment on Wiseman's milk pricing decision until its status was confirmed, although she added that "any decision to lower milk prices is obviously bad news for dairy farmers."

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