Deputy chairman Andrew Hemming told FoodManufacture.co.uk that the planned move into more lucrative powder – dried whole milk soared to $3,801 (£2,319) on world markets in January – was “an opportunity to take control of a marketplace that isn’t working as fairly as it should be”.
Depending on farmer support, the new site would mean reduced sales of liquid milk to supermarkets, and Hemming said: “If people had played fair with us over the past six months then 5-6p per litre would have gone back to producers. We’ve had real problems getting paid a fair price for our products.”
Access to world markets
He added that the new multi-million pound facility would allow farmers to access a world markets, and provide them with the flexibility to store powder, thus reducing susceptibility to liquid milk price volatility.
With FFA bidding to move up to 25% of the UK’s liquid milk abroad in the long term (in powder form) the retailers would learn that milk “couldn’t simply be given away”, Hemming said, adding that in mainland Europe farmers received 32p per litre, where UK farmers only get 24/25p.
Confirming that any site would be situated in Northern England, close to the motorway network, he said: “We already have a drying facility in Westbury (used by Milk Link, First Milk and Arla), [the UK’s biggest], while a lot of milk is produced in Cheshire.”
Overseas funding
Overseas money would fund the new site, he said, adding that (in light of media reports suggesting FFA would form a co-operative, with farmers contracted to fund the venture) he hoped producers would not have to contribute too much.
The plan is the latest bold move from the FFA, which made headlines last December after a spat with Asda (now resolved) when the retailer sought a court injunction against the group following protests against the retailer’s discounting policies.
UN Food and Agriculture Organisation (FAO) figures show that world dairy prices rose 6.2% in January against December, just short of record peaks in November 2007.
January prices for butter soared to $4,925 per tonne, up from $4,500 in December 2010, while skimmed milk powder hit $3,500 up from $3,075; whole milk powder rose from $3,550 to $3,801.