Supplementary memorandum submitted by
Mr Karl Tucker, Business Development Director, Yeo Valley Organic
Co Ltd (F67)
First I would like to correct some information
that was given to the Committee by Mr Bill Wadsworth of Iceland.
In his evidence he stated that the Organic Milk Suppliers Co-operative
(OMSCo) milk price had risen from 29.5 pence per litre to 33 pence
per litre in the past week. This fact is wholly inaccurate. As
the Committee members will be aware, there is always a differential
between the ex farm price for milk (ie what the farmer receives
for his milk) and the delivered price paid by the processor. This
differential is due to the cost of transport and administration
borne by such bodies as OMSCo in the collection and delivery of
raw milk from the farm to the processor. Mr Wadsworth's assertion
that the OMSCo milk price had risen effectively by 3.5 pence per
litre demonstrated his lack of understanding of the difference
between ex farm and delivered milk prices, which was in actual
fact what he was referring to. I believe it is important that
this error in Mr Wadsworth's evidence is brought to the attention
of the Committee members.
We have in conjunction with OMSCo gone to great
efforts to ensure that the price for organic milk produced and
supplied by OMSCo accurately reflects the costs of production
and is sustainable at its current level. I refer to the verbal
answer I gave to the Committee during our evidence.
I would also like to emphasise the fact that
Mr Wadsworth's claims that Iceland had carried out a similar exercise
of calculating the cost of organic milk production was based around
only two farms in Cheshire. It is not known to what standards
these two farms operate but I would suggest that they are unlikely
to be a suitable representative sample to provide an average figure
for the whole of the UK. I also understand that the two farms
used by Iceland are farmer/processors. This is an important point,
as it will depend upon where you "cut the cake" as to
the price valuation you will place on the milk and on the finished
product.
Iceland have made their position clear with
regards to their pricing aspirations for organic products in general,
as I believe Mr Wadsworth articulated on numerous occasions during
this evidence. However, whilst as a business we fully support
marking organic products available to consumers at the lowest
possible price, it must be at a price that supports the real cost
differential in growing and producing them. We believe that the
biggest threat to the burgeoning UK organic market is the impact
of unreasonable downward pressure on prices by retailers (ie Iceland)
that will encourage farmers and processors to "cut corners",
ultimately putting the organic standards and the integrity of
the industry as a whole at risk.
If you could pass on this information to the
Committee members I would be most grateful.
31 October 2000
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