Retailers Warned Over Erosion of Critical Mass in Dairy

UK - Farming leaders from across the dairy industry have issued a call on retailers and the food service sector to take steps to secure the future of British supply. The call comes as many dairy famers are once again being paid less for their milk than it costs to produce it.
calendar icon 3 June 2009
clock icon 3 minute read
National Farmers Union

In a letter to all the major retailers, discounters and major food service players the NFU, Farmers for Action, Royal Association of British Dairy Farmers, Dairy Farmers of Scotland, NFUS, NFU Cymru and the Farmers' Union of Wales have called for action to increase confidence among dairy farmers to stop the erosion of critical mass within the sector.

The industry-wide group says that everyone in the milk supply chain needs to make a fair profit and calls for retailers to stop gambling with security of milk supply. The letter asks for three commitments from the industry's biggest customers:

  • Commitment to sourcing British dairy products.
  • Transparent and stable pricing mechanisms for liquid milk and cheese suppliers that offer producers a sustainable milk price.
  • Promotion of the Red Tractor on all own label, British dairy products.

The letter states: "Our message is very simple. If you want to guarantee a supply of quality British milk, cheese and dairy products you must take steps to secure it."

NFU Dairy Board Chairman Gwyn Jones said:

"As British milk supply continues to fall, consumers are increasingly denied the opportunity of choice they deserve to purchase British dairy products; products which are produced to the highest welfare and environmental standards in the world.

"Consumers are paying a fair price for British dairy products but that money is not distributed fairly down the supply chain. The difference between profit and loss for dairy farmers in this country is a small fraction of the overall margin on milk and dairy products, which could easily be afforded."

NFU Cymru Milk Board Chairman Mansel Raymond said:

"Milk price cuts in recent months have seriously dented producer confidence and led to greater concerns for the sustainability of domestic milk production. Our organisations have taken this step to stand together to call on retailers and the food service sector to make a firm commitment to British milk producers."

Chairman, NFUS, Jimmy Mitchell:

"NFUS fully supports all producer organisations joining forces to promote the interests of all dairy farmers. We also believe strongly that the future of the British dairy industry depends on an effective supply chain which ensures fair returns for all parts of that chain. Only when this becomes a reality will producers have the confidence and enthusiasm to invest and reverse the decline in production."

Farmers For Action, Chairman David Handley said:

"In an unprecedented move by farmer organisations, this letter should leave no retailer or buyer in any doubt that we will no longer tolerate the current trend of low milk prices and the total imbalance of profits in the dairy chain."

RABDF chairman, Lyndon Edwards said:

"British dairy farmers must receive a fair and sustainable price for their milk immediately; otherwise consumers will not have the option to buy fresh British milk in future."

Dairy Farmers of Scotland Chairman, Iain Smith:

"Everyone involved should take this letter and its contents very seriously. Never before has there been such a level of discontent among dairy farmers - not only in the UK - but worldwide. UK milk buyers are only fooling themselves in using EU and world markets as benchmarks for prices if they are to expect a continued supply of milk."

FUW Vice President, Eifion Huws:

"The fact that our respective organisations have come together and issued this stark warning demonstrates the seriousness of the situation. We all know of the devastating consequences that have resulted from short-sighted decisions in the financial industry. We are calling on leaders in the dairy supply chain not to make similar mistakes that will have long term repercussions for British food and farming."

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