Fears Grow for Another Round of Milk Price Cuts

UK - NFU dairy board chairman Gwyn Jones has condemned milk processors following what he fears is the start of another round of milk price cuts.
calendar icon 8 April 2009
clock icon 2 minute read

Mr Jones said: "No sooner has Dairy UK started talking about the 'green shoots' of recovery in the dairy industry than its members come along and trample them underfoot.

"Not a day has gone by this month without there being news of another milk price cut - farmers would be forgiven for thinking that First Milk's announcement of a 1.25ppl cut on liquid and cheese on April 1 was a bad April Fool's joke, had it not been preceded only days before by Dairy Crest announcing a 1.25ppl cut for its Davidstow suppliers.

"Yet it's Arla that has the biggest boots in being the first big liquid player to announce a milk price cut of 1ppl from May. My big concern is that Wiseman's and Dairy Crest will see this as an opportunity to follow Arla's lead.

"Milk Link must be applauded for holding its April price, but why are they one of a minority of processors able to achieve this? Serious questions need to be asked about how effectively other companies are managing the pressure and how effective their strategies are for getting the best returns from a volatile market."

NFU Scotland also expressed their frustrations. Milk Committee Chairman Jimmy Mitchell said: "All within the dairy chain must ask themselves what signals they are sending out. This latest cut comes a week after an independent report, carried out by the farm business firm Promar, suggests that the average cost to a farmer of producing a litre of milk on farm is currently around 26p. The price cut leaves the average Arla producer receiving just 24p per litre for their efforts, despite their milk being sold as a high value, fresh product by three of the country’s largest supermarkets.

“The rot in prices has got to stop and all parts of the chain involved in producing milk and dairy products need to take stock of the damage that is being done at farm level. The industry is well aware that the number of producers currently leaving milk production is exceeding the numbers of farmers planning to expand their dairy herds and milk production in the UK is already at its lowest level since the early 1970s and likely to go lower.

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