0719096332 by Unknown

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Published: 0101-01-01T00:00:00+00:00

Exhibit 3.11 Processor market shares (%) in the UK fresh milk sector, 2011–2012

Source: DairyCo

Exhibit 3.12 Big three dairy processors: turnover, purchases and value added, 2004–2012 (£m)

Note: The big three are Müller Wiseman, Arla-Milklink and Dairy Crest. Value added is the difference between turnover (or sales revenue) and the cost of bought in goods and services (purchases).

Source: annual report and accounts

Several of these egregious supermarket practices are now prohibited under the Groceries Supply Code of Practice (GSCOP), which was introduced in 2010 in response to the Competition Commission report. As of 2013, breaches of the code can result in investigations and fines on major supermarkets imposed by the government’s Groceries Code Adjudicator (GCA). The effectiveness of the GCA sanction is so far not proven and the fundamental problem remains an imbalance of power which disadvantages processors. Even if egregious abuses are eliminated and contracts clarified, processors will be compelled to accept deals which place them at a disadvantage; and this in turn means continually cutting costs internally while driving down non-aligned farmer prices. Following the widespread adoption of the NFU’s Voluntary Code of Conduct, the latter has become increasingly difficult. Meanwhile, competition and capacity utilisation difficulties are intensifying further due to the expansion plans of the deep-pocketed, unlisted foreign-owned processors: Müller claims to have invested £500m over the past two years, and wants to usurp the Danish cooperative, Arla, as the UK’s biggest processor (Mackenzie 2013b); Arla meanwhile is investing £200m into a 1bn litre capacity ‘super-dairy’ in Aylesbury.

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