The dairy industry should set the price of milk according to the value of the product it is turned into, and not commodity prices and intervention levels, a senior executive has said.
Dairy Crest commercial director Mark Taylor said his ‘Final Market Value Model’ would mean all in the supply chain received a price that reflected end values more fairly.
The model separates milk volumes into two markets. The first is a ‘value market’ of about 8.6bn litres, used for liquid milk, mature cheese, branded products and organics.
The second is a ‘standard market’ for the remaining 5.4bn litres of milk that is destined for use in commodity products, including long life liquid milk, mild cheese, bulk butter and powders.
Taylor admitted that the system would be complex to set up, requiring most farmers and all major processors and retailers to embrace the concept. Many will suggest this is unlikely, given conflicts in the supply chain.
“It’s a concept that is a twinkle in our eye at the moment,” said Taylor. “It needs much more debate with everyone in the industry.”
Taylor’s proposal is expected to be discussed at Defra in the near future.
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