Lord Haskins, the former chairman of Express Dairies, launched an extraordinary attack on the UK’s milk processors this week, claiming they were “stupid” and “idiotic”.
Speaking at the Semex dairy conference in Glasgow, Lord Haskins said “foolish” processors had pursued “suicidal” business practices that had helped multiple retailers to make massive profits on milk.
He estimated retailer gross margins on liquid milk in the UK were 25-35% compared with 8% in France. And sales of liquid
milk, he claimed, could generate up to 5% of supermarket profits.
But far from criticising retailers for the size of margins, he tore into the processors for allowing their customers to make so much money from milk while they struggled.
“The retailers are paying the stupid processors, who are turning over their stock twice a day, after 60 days. The processors are behaving in an idiotic way and I don’t know how they are going to increase their profits.”
He estimated that processors should be getting a margin of at least 2-3p a litre out of the liquid milk sector, more than they were getting now, he believed.
He added: “How that is going to be achieved when processors act in such suicidal ways I don’t know. Perhaps the foolish liquid milk processors will eventually bring their capacity down to that of the market, thereby strengthening their position.”
Lord Haskins also said the solution to low farmer milk prices was to cut output by 20%. Buyers of liquid milk, worried year-round supply would not be guaranteed, would be forced to pay more to secure it.
Lord Haskins stepped down as chairman of Express Dairies in 2002, slightly more than a year before the company merged with Arla.
Chris Walkland