• •

THE IMPLICATIONS OF UK DAIRY SECTOR ADJUSTMENT

Paper presented at the Symposium on UK Milk Marketing in a Changing Environment. Annual Conference of the

Agricultural Economics Society, University of Newcastle upon Tyne, 27-30 March 1996.

Duncan Anderson John Davis

Department of Agricultural and Food Economics, The Queen's University of Belfast, Newforge Lane, Belfast BT9 5PX, UK.

1. Introduction The UK dairy sector operates within an EU market and policy framework. It also comprises milk markets in England & Wales, Scotland and Northern Ireland which are characteristically different but inter-linked. Therefore, for example, a reduction in support prices or production quotas under CAP reform, or an increase in daily product imports from the rest of the world under GATT, or the deregulation of the UK milk market through the removal of the Milk Marketing Boards (MMB), are all likely to affect the dairy sectors in each of the UK regions differently. Moreover, any policy change will not only affect the UK's milk markets directly, but also indirectly through trade linkages with the dairy markets in other EO regions. With the removal of the MMB's and the creation of the European Single Market, these trade linkages are increasingly important.

The effects of reduced market protection and increased trade in the imperfectly competitive setting oflarge and interdependent milk processing firms are influenced by so-called "dynamic effects". Firstly, more open trade can reduce distortionary pricing above marginal costs as the number of firms fl:om which to purchase dairy products increases. Secondly, market deregulation, reduced support prices and increased trade can help eliminate the wasteful duplication of milk processing plants and/or firms, whose high fixed costs drive up dairy industry costs. Thirdly, stronger competition should also lead to the further lowering of dairy industry costs through the reduction of "X-inefficiency", that is, poor allocation and utilization of resources inside a firm due to weak external competition. Finally, consumer and processor reactions to price changes in one dairy product market will have implications for other dairy product

1

markets which are related to it through either production, demand or vertical linkages, and may in turn affect the trading relationships of these related products.

1his paper reports the results of a computable spatial price equilibrium (CSPE) model which was employed to analyse the UK dairy sector within an ED market and policy framework. The milk and milk product markets in the ED member states were modelled as an integrated system through incorporating in the model's structure many of the production, demand and vertical linkages which operate within these markets as well as the important trade linkages which now operate between them. Two specific developments are examined: (1) the deregulation of the UK milk market, and (2) the reform of the dairy regime of the Common Agricultural Policy (CAP) under the General Agreement on Tariffs and Trade (GATT). The dynamic effects which are likely to result from the increase in competitive pressure created by these market and policy changes are included in the analysis. A discussion of the modelling approach used is contained in the Appendix.

2. UK Milk Market Deregulation The dairy industry in the UK is unique in Europe in having had compulsory regional milk producer organisations since 1933 and 1934, in the cases of England&Wales and Scotland respectively, and since 1955 in Northern Ireland. Ritson and Swinbank (1991) argue that in the bilateral monopoly situation, which existed through the operation of the Joint Committees, that the Milk Marketing Boards and the Dairy Trade Federations collaborated at the expense of the consumer by pushing up the price of liquid milk in order to compensate for lower manufacturing milk prices. Williams (1993) states that the returns for manufacturing milk were low because they were dominated by the formula pricing arrangements for butter/skim milk powder. These included the averaging of all market returns for these products and the subtraction of average costs per tonne in all factories producing them, obtained through an agreed set of accounting rules. In the case of England and Wales, for example, this system was known as CATFI (Common Approach to Financiallnformation). Colman (1992) also argues that the imposition of milk production quotas further intensified the price­depressing effect of the CATFI system, as the reductions in plant capacity did not match the re<!.uctions in milk deliveries for b eLJl1:o.duction. Therefore, the unit costs of butter and SMP production, which weres osted into the formula price for milk for butter production, were greater than would otherwise have been the case.

Deregulation of the UK milk market has been achieved through the removal of the statutOlY Milk Marketing Boards, and has involved two fundamental changes . . ,Firs!, end-use pricin~ has been eliminated; processors no longer have to pay different prices for raw milk according to eii'O-Use. Second, deregulation has enabled the :free movement of raw milk within the UK and between the UK and other ED regions. As expected, with an over-capacity milk rocessin indust com etin for limited milk supplies, one short-run effect of these chan es has been si . cant increases in raw m pnces; wit inevl aot rationalisation of processing capacity and reductions in personnel. There is also evidence of increased trade in raw milk, for example, :from Scotland to Northern Ireland and :from England to Belgium (Dairy Industries Internationa~ May 1995). However, the long-run implications of UK milk market deregulation remain unclear.

2

2.1 Milk market deregulation: assumptions of the analytical model The following assumptions are made about UK milk market deregulation ill this modeling exercise.

1. The free movement of raw milk within the UK and between the UK and other EU regions is assumed. This is achieved by introducing into the analytical model, in contrast to the 1992 base year model, the possibility of trade in raw milk between the UK regions, and between the UK regions and the other EU regions.

2. There is no disciminatory end-use pricing of raw milk, that is, all processors within a UK region pay the same price for their raw milk supplies. This is achieved by removing the end-use pricing equations which were incorporated in the 1992 base year model. Raw milk markets are not assumed to be differentiated by season of production, or by quality, or by the location of production within the relevant regIon.

3. Processing margins are assumed to be reduced through industry rationalisation. The assumed reductions in processing margins were based on processing cost savings calculated for NI dairy industry rationalisation as reported in Davis et al. (1991). The processing margin reductions in England&Wales and Scotland were estimated by comparing the milk processing industry structures in those regions with that in NI. These estimated processing margin reductions include long-run cost lowering dynamic effects.

2.2 Milk market deregulation: a summary of results Table 1 provides an estimate of how milk market deregulation affects the economic welfare of milk producers in the UK regions as measured by producer surplus. As a perfectly inelastic supply curve is assumed at quota quantities, producer surplus is also producer revenue. We see from Table 1 that, on average, UK milk producers suffer a 2.54 % loss in welfare. Worst affected are producers in Scotland (-7.17%), producers in N. Ireland are least affected (-0.33%), while producers in England&Wales suffer a loss in welfare close to the national average (-2.30%).

Table 1 UK Producer Welfare

Base Model Milk Market Difference from Difference from Region Deregulation Base Model Base Model

(Mill. ECU) (Mill. ECU) _(Mill. ECU) (Percentage) En~land& Wales 2907 2840 -67 -2.30 % Scotland 293 272 -21 -7.17 % Northern Ireland 299 298 -1 -0.33 % United Kingdom 3499 3410 -89 -2.54 %

Table 2 provides an estimate of how milk market deregulation affects the economic welfare of milk product consumers in the UK regions as measured by consumer surplus. Consumer surplus is estimated here for liquid milk, butter and cheese at retail level, and for WMP and SMP at wholesale level. However, consumer surplus changes

3

which may result from adjustments in the prices of cream and skimmed milk used in the production of other milk products are ignored, as it is not always clear how the prices of these products would adjust at the retail level. Moreover, possible changes in the prices of other related non-milk food products are ignored (see Traill and Henson, 1994). Any impacts on EU finances, and therefore on taxation, are also ignored.

The figures in Table 2 suggest that as a result of milk market deregulation consumers in the UK on average make a welfare gain of 2. 61 %. Consumers in Scotland gain most (3.43%), consumers in N.heland gain least (1.36%), whilst the welfare gain of consumers in England&Wales is close to the national average (2.56%).

Table 2 UK Consumer Welfare

Base Model Milk Market Difference from Difference from Region Deregulation Base Model Base Model

(Mill. ECU) (Mill. ECU) (Mill. ECU) (Percentage) England& Wales 12982 13314 332 2.56 % Scotland 1427 1476 49 3.43 % Northern heland 440 446 6 1.36 % United Kingdom 14849 15236 387 2.61 %

In summary, therefore, consumers gain from milk market dere lation through a lowerin of li uid milk rices while t .~ oducers loss of the Jiquid_premiumJs -not sufficiently compensated for by ..!!?-e proc~!)§ing margin reductions w~ch result from in us ry ra lOna . sation. Clearly, the welfare effects of milk market deregulation are cn lcally depen ent on the degree to which processing margins fall as a result of an increase in comp etitive pressure.

3 Reform of the CAP under GATT Reform of the CAP is a continuing process. It may result in an agricultural industry which has little state intervention in markets, with any income support to producers given in the form of direct payments. Moreover, it is probable that a significant element of aglicultural policy will be strongly influenced by environmental concems. In addition, any future EU aglicultural policy will have to operate within the constraints of the GATT concerning, for example, agricultural income SUppOlt and trade in food products.

The reform of the CAP under GATT is also a rather uncertain and complicated process. Proposed changes are often subject to review, and ultimately depend on market circumstances and political developments; therefore, making an accurate prediction of the impact on the UK dairy sector of CAP reform under GATT is a very difficult task. Moreover, the analysis would require a model which incorporated within its structure in a realistic way the complete range of measures currently operating in the dairy regime of the CAP. Agri-monetary and budgetary factors would also need to be considered. The aim of this analysis, however, is much less ambitious. It is, to use

4

an EU CSPE dairy model to examine the implications for the UK dairy sector of a typical CAP reform under GATT scenario (the CAP/GATT scenario or model).

3.1 CAP Reform under GATT: assumptions of the analytical model In this modeling exercise the following assumptions are made about CAP reform under GATT.

l. It is assumed that milk production quotas are reduced by 2% of their 1995 level. A reduction of2% has already been agreed under the CAP Reform package but has not yet been implemented.

2. Support prices relating to butter, cheese, WMP and SMP are assumed to be reduced by 10% from their 1992 level by lowering the institutionally determined subsidised export price to the rest of the world by 10%. As support prices have already been reduced from their 1992 base year levels, for example, through reductions in intervention pIices and export subsidies, it is probably correct to assume that a support price reduction of 10% represents a modest pace of CAP reform.

3. Imports into the EU are assumed to be increased by 230% 1i-om their 1992 level, which increases the quantity of imports to 4% ofEU domestic consumption. This assumes that importers from the rest of the world will not take up all of the import oPPOltunities created under GATT, which requires the creation of imPOli opportunities up to 5% of domestic consumption. These increased quantities of impOliS are assumed to enter each member state in the same proportions as was the case in the base year 1992.

4. The dynamic effects created by the increase in import pressure and the reduction in SUppOlt prices result in a 5% reduction in processing margins and a 5% reduction in market specific transfer costs in all EU markets. A modest 5% reduction in processing margins was assumed, as it was felt that the palticular CAP/GATT scenario employed in the analysis represents a moderate increase in competitive pressure. Similarly, the 5% reduction in market specific transfer costs represents a modest decline in distortionary pricing and lowering of trade related transaction costs resulting fi-om increased competitive pressure.

3.2 CAP Reform under GATT: a summary of results Table 3 provides an estimate of how the CAP/GATT scenario assumed in this study affects the economic welfare of milk producers in the UK regions as measured by producer smplus. Again, as a perfectly jnelastic supply curve js assumed for producers at quota quantities, producer surplus is also producer revenue. The model predicts that UK milk producers would suffer a significant reduction in welfare ( on average -12.7%) as a result of the assumed CAP/GATT scenario.

5

Table 3 UK Producer Welfare

Milk Market CAP Reform Difference Difference Region Deregulation under GATT from Post from Post

(Mill. ECU) (Mill. ECU) Deregulation Deregulation Model Model

(Mill. ECU) {Percentage) England & Wales 2840 2478 -362 -12.75 % Scotland 272 241 -31 -11.40 % Northern Ireland 298 258 -40 -13.42 % United Kin~dom 3410 2977 -433 -12.70 %

Table 4 provides an estimate of how the CAP/GATT scenario assumed in this study affects the economic welfare of milk product consumers in the UK regions as measured by consumer surplus. The same caveats apply here as in the UK milk market deregulation analysis. This analysis finds that consumers in the UK neither gain nor lose.

Table 4 UK Consumer Welfare

Milk Market CAP Reform Difference Difference Region Deregulation under GATT from Post from Post

(Mill. ECU) (Mill. ECU) Deregulation Deregulation Model Model

(Mill. ECU) (Percentage) En~land& Wales 13314 13317 3 0.02 % Scotland 1476 1475 -1 -0.07 % Northern Ireland 446 446 0 0.00 % United Kingdom 15236 15238 2 0.01 %

In summary, this analysis suggests that under a typical CAP/GATT scenalio, milk producers in the UK suffer a substantial welfare loss while UK consumers remain largely unaffected. As with UK milk market deregulation, however, the welfare effects are clitically dependent on the degree to which distortionary pricing is reduced and processing margins are lowered as a result of increased competitive pressure.

6

APPENDIX

The Analytical Model

A.I The economic environment The economic environment assumed in the modeling exercise is outlined below in algebraic form. Assume an n region m product sector where: ~ k, j are the primary product supply, final product processing and final product

p,f QDjf QPkf XFkjf XPikp PMkf PFjf PWjf

PDkp PPip TFkjf

TFMjf

TPikp

TPMkp

IOpf QSip

demand regions respectively; ~ k, j = 1, 2 ........ n. are the primary products and final products respectively; p, f = 1, 2 ..... m. is the quantity of final product f consumed in region j . is the quantity of final product f produced in region k. is the quantity of final product ftransported from region k to regionj . is the quantity of primary product p transported from region i to region k. denotes the processing margin for final product f in processing region k. is the retail price for final product f in demand region j. is the wholesale price of final product f as delivered to retailers in demand regIOn]. is the price of primary product p as delivered to processors in region k. is the price of primary product p as supplied by producers in region i. is the transport cost per unit of final product ftransported between regions k andj. is the market specific transfer margin per unit of final product f transferred

to demand regionj. is the transport cost per unit of plimary product p transported between regions i and k. is the market specific transfer margin per unit of primary product p transfened to processing region k. is the quantity of primary product p required to produce final product f is the fixed supply of primary product p in the supply region i.

A.2 Model structure 1bis section gives the actual regions, and products assumed in the analytical model.

(i) Regions The regions included in the model are England and Wales, Scotland, Northem Ireland, Republic of Ireland, Germany, France, Italy, Netherlands, Belgium, Luxembourg, Denmark, Greece, Spain, Portugal and the Rest of the World. All the ED regions are primary product supply regions, final product processing regions and final product demand regions, while the rest of the world region is a demand region only.

(ii) Products The final milk products included in the model are Liquid Milk, Butter, Cheese, Whole Milk Powder, Skimmed Milk Powder, Other Products ( made from) Cream and Other Products ( made from) Skimmed Milk. In effect the Other Products Cream and Other

7

Products Skimmed Milk products represent the derived demand for raw milk from an "all other products" category in each supply region (i.e. where i = k = j ), as no processing, transport, market related, or retail margins are assumed for these products. The primary products included in the model are Cream and Skimmed Milk.

(iii) Production linkages In this model production linkages are modeled using an activity analysis specification. The quantities of cream and/or skimmed milk used per unit level of operation (the input coefficients) and the quantities of dairy products produced per unit level of operation (the output coefficients) are assumed fixed and known.

(iv) Demand linkages For each region and final product, the demand relations are given as linear functions in the following form:

rn PFjf = Ajf - L Bjfh QDjb allj and f

h=1 or

PFjl Ajl Bjll Bjl2 Bjlm QDjl

PFj2 Aj2 Bj21 Bj22 Bj2m QDj2

PFjm Ajm BjlDl Bjm2 Bjmm QDjm

or

Pj = Aj - Bj Qj

where Ajf > 0, Bjfh > ° for h = f and Bjfll S or ;::: ° for h ::F- f for all hand f.

Bj is not necessarily symmetric but is positive semi - definite for all j .

(v) Vertical linkages The model includes several vertical linkages in the food chain. That is, producers and hauliers of Plimary products; and processors, hauliers, retailers and consumers of final products.

(a) Producers of primary products As is the case when milk production quotas are in place, the supply of the primary products cream and skimmed milk are assumed to be fixed in each supply region (i.e. at Qsip). However, a price responsive supply function could be incorporated into the model if required.

(b) Transport costs: primary products A constant per unit transport cost TPikp is assumed for the transportation of cream and skimmed milk (P) from the raw milk supply regions (i) to the milk product processing regions (k). This transport cost is assumed to be zero when the raw milk is processed in the region where it has been produced (i.e. where i = k).

(c) Market specific transfer margins: primary products It is assumed that raw milk markets may exhibit a market specific transfer margin TFMkp, where k represents the processors region and p represents the primary

8

products cream and skimmed milk. These transfer margins are only involved when processors source cream and skimmed milk from other regions. It should also be noted that they are not supply region specific, that is, they are the same regardless of where the product has been transfered from. The market specific transfer margins associated with primary products are likely to be less significant than for final products and would include search costs, insurance, legal costs and other trade related transaction costs. Feame and Ray (1995) discuss the importance of these transfer costs in the context of the UK raw milk market. In this study the TPMkp values were estimated using a calibration procedure which employed a version of the final analytical model.

(d) Processing Margins The per unit industry processing margin PMkf for milk products f in processing region k relates to all processing costs except the costs of primary products and may include a profit element. In this study it is assumed to be the difference between the competitive "benchmark" final product price and the primary product costs per unit of final product produced. They are assumed to take the following linear form: PMkr = APkf + BPkf QPkf all k and f

where: APkf > 0 and BPkf 2. 0

(e) Transport costs: fmal products A constant per unit transport cost TFkjf is assumed for the transportation of final products (f) from the processing regions (k) to the demand regions 0). This transport cost is assumed to be zero when the final product is consumed in the region where it has been processed.

(f) Market specific transfer margins: final products It is assumed that final products (f) in final product markets 0) may exhibit a market specific transfer margin of TFMjf These margins would include packaging, advertising, product modifications, legal costs, insurance and other tranaction costs. Also included in the final product market specific transfer margins are any processor profits generated through processing industry oligopoly power. These may be important in the context of modelling EU dairy markets, for example, Oncuoglu et al (1991) finds that these markets appear to be dominated by a cluster of approximately fifteen large scale finns which constitute a sort of dairy oligopoly. With processor oligopoly profits included in the TFMjf margin, the EU dairy sector was assumed to be at equilibrium when system net revenues were zero. Consequently, the model reached equilibrium when its objective function value was zero, which provided a helpful check on the logic of model specification and on the accuracy of data entry.

In this study the TFMjf margins are assumed to be the difference between the competitive "benchmark" final product price and the final product price in each of the other markets. This approach has similarities to the procedure employed by Wann and Sexton (1993) to measure oligopoly power in multiple processed product markets by analysing the margin between the price of each processed product form and the competitive benchmark product's price.

9

•

(g) Retailing margins Retailers are assumed to deduct a constant percentage (or margin) from their selling price. Therefore, the price of the product as delivered to the retailer (PWjf) is derived as follows: PWjf= PFjf( 1 - RMjf) allj and f or

OJ

PWjf = «Ajf - L Bjfh QDjh) 1 - RMjf) andj and f b=l

where: RMjf is the retailer margin for product f in demand region j.

(vi) Trade linkages Trade linkages are represented by the usual spatial price equilibrium inequalities. As shown below for primary products, the difference between the price of cream or skimmed milk in a processing region (k) and the equivalent price in a supply region (i) must be less than or equal to the transport cost and market related transfer margin between the two regions: (TPikp + TPMkp - (PDkp - PPip) ~ 0 all i, k and p

For milk products, the costs of production and delivery (raw milk costs plus processing margin plus transport cost plus market related transfer margin) between each processing region (k) and demand region (f) must be greater than or equal to the price of the product as delivered to the retailer (PWjf). That is:

III

«L IOpfPDkp) + PMa + TFkjf + TFMjf) - PWjf ~ 0 a11 k, j and f p=l

(vii) A primal-dual net revenue formulation The primal-dual net revenue CSPE formulation has many advantages. Firstly, restrictions on the functional forms of the demand, supply and transformation cost functions can be relaxed in such a way that many non-linear functional forms consistent with accepted economic theory and econometric estimation methods can be used in this generalised modelling framework. Secondly, asymmetlic sets of supply and demand coefficients can be utilised in this formulation. Thirdly, it is easy to impose constraints on prices and quantities as they both enter the model as explicit variables. Finally, a very useful characteristic of the net revenue formulation is that when the model is solved under the assumption of zero system net revenue at equilibrium, then the optimum value of the objective function is zero. This permits velIDcation that the model has been constructed in a self-dual fashion, and provides a helpful check on the logic of model specification and on the accuracy of data entry. For a detailed discussion of the primal-dual net revenue CSPE formulation see Takayama and MacAulay (1991).

A.3 The mathematical programming model Using the equations described above and the standard primal-dual net revenue formulation as described in Takayama et al. (1971), the following model can be constructed. With a quadratic objective function and linear constraints any local maximum is also the global maximum

10

•

Find (QD,QP,XF, XP,PF,PW,MS,PM,PD,PP) > 0

that maximises:

It m m

Z == L L (Ajf - L BjOl QDjh) QDjf j=1 f=! h=\

n m III

-L L «Ajf - L BjOl QDjh) RMjf) QDjf j=\ [=1 h=\

n m

_ L L (A Pkf + BPkf QPkf) QPIct-k=1 f=1

n n ill

-L I I (Wkjf + TFMjf) XF~if k=1 j=1 f=1

U II m

-L L L (TPikp + TPMkp) XPikp ;=1 k=l p=1

n ill

-I L PPip QSip i=l p=l

Subject to: II

(1) L XFl;jf - QDjf ~ 0 allj and f k=1

n

(2) QPkf - L XFkjf ~ 0 all k and f j=l

Il III

(3) L XPikp - L Qfu IQ,f ~ 0 all k and p

(4)

;=1 f=1

n

QSip - L XPikp ~ 0 k=l

m

all i and p

(5) Pfjf - (Ajf - L Bjfu QDjh) ~ 0 allj and f h=l

m

(6) PWjf - «Ajf - L Bjfh QDjh) 1 - RMjf) ~ 0 allj and f h=l

(7) (APkf + BPkf QPkf) - PMkr ~ 0 all k and f 01

(8) «L IOp[PDkp) + PMkr + TFkjf + TFMjf) - PWjf ~ 0 all k, j and f p=1

(9) (TPikp + TPMkp) - (PDkp - PPip) ~ all i, k and p

A.4 The Benchmark Equilibrium Set and Model Calibration The spatial equilibrium model described above was numerically calibrated to a data set, which reflected the levels of dairy product production and demand, dairy product

11

II

prices and raw milk producer prices in the EU for the benchmark period 1992. The construction of this model-conformable data set involved the synthesis of various incompletely articulated statistical sources which were rarely consistent with each other or with the theoretical framework assumed, and constituted itself a significant work stage within the empirical implementation process. The data set construction procedure and model calibration are extensively discussed in Anderson (1995).

The plimary sources used in the construction of the benchmark equilibrium data set were Federation of United Kingdom Milk Marketing Boards (various years), Milk Marketing Board for England and Wales (various years), and International Dairy Federation (1994). Packaged liquid milk was assumed to be a standard 3.5 % fat product, while raw milk was assumed to have a standard fat content of 3.7 %. The data relating to the various cheese types (i.e. hard, semi-hard, fresh and quarg, and soft cheeses) were converted to a standard hard cheese equivalent on the basis of dry matter content. The fresh and quarg cheese quantity was further adjusted on the basis of fat; because, as compared to the other three cheese types, fresh and quarg cheese (on a % of dry matter basis) has a fat content of approximately one third.

The data were stored and processed on the Super Calc 5 spread sheet package, and exported into GAMS in a GAMS compatible form. The models were generated and solved using the non-linear mathematical programming system GAMS-MINOS. These models are large, for example, they typically consist of around 2100 rows, 2100 columns, and 10000 non-zero elements.

References

l. ANDERSON, D. (1995). The Economics of Adjustment in Food Markets with Special Reference to the United Kingdom Dairy Sector. Unpublished Ph.D. thesis, Department of Agricultural and Food Economics, Queen's University Belfast.

2. COLMAN, D.R. (1992). The breakdown of the Milk Marketing Schemes. Oxford Agrarian Studies, Vol. 20, No.2, pp 129-138.

3. DAIRY INDUSTRIES INTERNATIONAL (1995). British milk is bound for Belgium May 1995, p 5.

4. DAVIS, J; A. KIRKE; I. HASSARD and D. ANDERSON (1991). The competitiveness of the Northern Ireland dairy sector: an analysis of industry structure and performance. Department of agricultural and food economics, The Queen's University of Belfast.

5. FEDERATION of UNITED KINGDOM MILK MARKETING BOARDS (various years). UK Dairy Facts and Figures.

6. FEARNE, A. and D. RAY (1995). The impact of de-regulation on the UK dairy sector: long-term prospects for UK milk prices. Farm Management, Vol. 9, No.2, pp 76-86 .

12

• •

7. INTERNATIONAL DAIRY FEDERATION (1994). Consumption statistics for milk and milk products. Bulletion No. 29511994. International Dairy Federation, Brussels.

8. MILK MARKETING BOARD for ENGLAND and WALES (various years). EC Dairy Facts and Figures.

9. ONCUOGLU, S.; R PEREZ and 1.L. RASTOIN (1991).The competItIVe strategies of private groups and cooperatives in the European dairy industry. Agropolis-Strategies, Montpellier.

10. RITSON, C and A. SWINBANK (1991). The British Milk Marketing Scheme -Implications of 1992. Paper prepared for the 25th EAAE Seminar (24 June 1991), Braunschweig - Volkenrode, Germany.

11. TAKAYAMA, T. and T. G. MacAULAY (1991). Recent developments in spatial (temporal) equilibrium models : non-linearity, existence and other issues. In : International commodity market models : advances in methodology and applications (eds. O. Guvenen et al.), Studies in economic modelling, Chapman and Hall, London, chapter 3.

12. TRAILL, W.B. and S. HENSON (1994). Price Transmission in the United Kingdom Yellow Fats Market in the Presence of Imperfect Competition. Journal of Agricultural Economics, Vol 45, No 1.

13. WANN, 1. and R.1. SEXTON (1993). Imperfect competition in multiproduct food industries with application to pear processing. In : Competitive strategy analysis in the food system (Edited by R. W. CotteIill). Westview Press, Oxford.

14. WllLIAMS, RE. (1993). The future of milk marketing. Journal of agricultural economics, Vol. 44, No.1, pp 1-13.

13