Creating a sustainable strategy to give farmers ‘one of the best’ UK milk prices

ALTHOUGH the current milk price being paid by the Lancashire-based Fylde Dairies is a competitive 25p, a more important concern for the company is that this, and any improvement on top, can be sustained.

The ultimate aim is that supplying farmers will enjoy one of the best, if not the best, price in the UK.

The business was started by food industry businessman Howey Hegarty and two well-known Fylde dairy farmers – John Sanderson, of Pasture Barn, Kirkham, and Philip Critchley, of New Fold Farm, Wrea Green – and the strategy was to develop a sustainable business that can fully reward producers for high quality milk.

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But, importantly, they are adamant the producer milk price must not surge forwards ahead of the market, only to fall back again.

“We are taking a staged approach to recruitment and sales and when the milk price moves forwards, it will be to a level we can maintain.

“Producers need to be able to plan ahead and they can only do that if they have confidence in the sustainability of the prices they are paid,” said Mr Hegarty, whose background is sales and logistics.

He did in fact bring with him to the business, a customer portfolio of more than 180 with a further 230 coming on within its first three months of trading.

Fylde Dairies, he said, was not born out of producers’ dissatisfaction with their current milk price – although they might well have been dissatisfied – but out of a need to supply a discerning customer base with quality product.

More producers of quality milk – they must be on the Lancashire Fylde – are being sought and the contract on offer has been devised by the original farmer-partners.

Basically, the contract offers six months notice and there is no seasonality adjustment. Low scc and bactoscans are required and butterfat of at least 4 per cent and, to suit cheese manufacture, proteins between 3.1 per cent and 3.4 per cent in order to gain the current standard litre of 25p.

“We are trading on quality, provenance and traceability and are not interested in customers that are not prepared to pay the price for what we can supply. We have no ‘cheap’ customers,” said Mr Hegarty, who views milk produced on the Lancashire Fylde as something special in terms of quality and taste.

There are seven EFSIS approved producers at the moment sending in some 23,500 litres each day. Bulk collections are contracted out for now, as is bottling at Woodcocks, of Coppull, who also handle Bowland Fresh milk among other segregated volumes. Fylde has an arrangement with local cheesemaker J.J. Sandham who supplies to E.H.Booths and Asda. It is an arrangement that could be expanded into branded Fylde cheese for the milk company. The customer base also includes food service, schools, MoD, hospitals, an ice-cream manufacturer plus cafes and retailers of varying size.

Mr Hegarty says it is the broad spread of customers that give the business the flexibility to operate without any seasonality inducements.

The current split of milk usage is roughly 60 per cent into poly bottles and 30 percent to cheese and ice-cream manufacture.

While the business headquarters are at Bamber Bridge on the outskirts of Preston, it is planned to have four operating depots.

Mr Hegarty prefers to deal direct with customers and does not employ ‘salesmen’ and liaison with producers is in the hands of the two founding farmers directors.

Customer service, he says, is an important part of the marketing strategy and to that end, the business is also supplying fresh eggs, yoghurts, bread and fruit juice.

While new supplying farmers are actively being sought, he said no-one would be taken on unless they could be guaranteed long-term commitment and competitive price security.

“A lot of producers are sat on the fence at the moment just watching what the milk job is doing before they commit, I know we have people interested in our development” said Mr Hegarty.