Meadow Foods: fingers crossed for European dairy futures market

By Ben Bouckley

- Last updated on GMT

Related tags Meadow foods Milk

Meadow Foods: fingers crossed for European dairy futures market
Business is thriving, but a European dairy futures market would stem worries about price volatility for key inputs, says leading UK dairy group Meadow Foods.

The independent company announced a 6.5% increase on sales for the year ending September 30 2010, which took its turnover to £263m and staff levels to 260, with income boosted in part by the acquisition of Peterborough-based Nene Valley Foods in May.

But despite this success Ron Middleton, Meadow Foods sales director, told FoodManufacture.co.uk: “The key challenge across the dairy industry as a whole remains managing input volatility. The last two or three years have been a bit of a rollercoaster ride in terms of pricing and availability, managing this is a challenge for ourselves and our customers.”

The EU Commission now intervenes less than it used to in pricing, Middleton explained: “Subsidies are gone for the dairy industry, and there’s little interference, but this does mean that that the sector is increasingly exposed to world markets, and there are no export refunds.”

A Chicago-style market for dairy futures would enable financial hedging and allow greater surety about input prices, he said.“We need enough people involved ​[to establish the market] for sufficient liquidity, but there is the interest out there,”​ said Middleton, before adding “speculatively”​, that such a move could occur within 18 months.

Food manufacturing focus

Meadow Foods is unique, said Middleton, in that it is the only major UK dairy ingredients firm that focuses solely on ingredient sales to “most of the blue-chipUK food manufacturers​”. This helps the firm focus on what it does well, he added, where other major European players also supply retailers.

As for the sectors that drove the firm’s 6.5% sales increase for 2010: “Milk and skimmed concentrates is one area, but the key has really been our acquisition of Nene Valley and its provision of fresh and cultured products.”

Middleton said consolidating Nene Valley into the group was straightforward enough, where Meadow Foods “knows the fresh market”​, despite lack of experience in cultured products. Although there are no current plans, he also hinted at further acquisitions.

Functional future for milk?

Asked whether Meadow Foods could follow Dutch dairy co-op FrieslandCampina’s recent moves into added-value dairy ingredients, he said: “Such ventures are very specialised and they need careful evaluation regarding product and route to market.”

However, Middleton said that Meadow Foods are looking beyond basics such as butter and cream, with higher value products a possible means to higher margins.“We’re at a fairly early stage with some new concepts, but we are looking at ways of getting more out of milk and improving its functionality.”

“We’re evaluating interesting technology and processes, which may lead to something one day”.

Related topics Dairy Dairy-based ingredients

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