Northern Foods continues to sign up dairy farmers

NORTHERN Foods, the dairy company, has signed up enough dairy farmers to supply a 'significant amount' of its milk requirements after the Milk Marketing Board is abolished in November.

But it admitted that it will still have to buy some of its supplies from Milk Marque, the farmers' co-operative that will replace the MMB, which has already signed up about 19,000 of Britain's 28,000 farmers, accounting for 7 billion litres of the 11.5 billion litres produced each year.

Milk Marque estimates that a few thousand farmers, accounting for about a tenth of production, have yet to decide who to sell their milk to. Under the MMB arrangements, they had been forced to sell to the MMB, which then sold it on to dairy companies, but the reforms mean they can choose to go directly to the dairies if they wish.

Gillian Shepherd, Secretary of State for Agriculture, said when she approved the MMB's plans to wind itself up that she hoped farmers would decide by Thursday, while Northern Foods set a deadline of yesterday for farmers to sign its contracts.

It is offering 0.7p a litre more than the Milk Marque price, and is also tempting farmers with 1.2p a litre, paid in Northern Foods' shares, for each litre delivered in the first five months of the contract.

It takes about 18 per cent of all production but had not expected to sign up enough farmers to supply all its needs.

Neil Davidson of Northern Foods said that contracts were still expected to come in over the weekend so would not reveal its final total.

Unigate is also seeking contracts with farmers and it said that progress was 'in line with expectations'.

Both companies are concerned about Milk Marque's prices. Last month it announced that it would charge between 23.3p and 26.3p a litre - an increase of at least 8.4 per cent for butter powder manufacturers who pay the lowest price. Since then, however, there have been two devaluations of the green pound, which affect Milk Marque's prices. If these are not reversed by 1 November, they will mean a minimum price hike of 14 per cent, and an average of 9.4 per cent. That could mean the price of a pint will rise by more than 1p.