Dairy farmers vow to disrupt milk supplies

Cheap milk may seem like a good thing for consumers, but the latest cuts to farm gate prices of up to 2p per litre have left dairy farmers reeling.

Three of the UK’s major dairy suppliers – Robert Wiseman Dairies, Arla Foods UK and Dairy Crest – announced cuts to the prices they pay to farmers for their milk of between 1.65p and 2p per litre this week.

The cuts, which follow similar reductions in recent months, will leave some dairy farmers earning 4p per litre less than last year.

The latest round of farm gate price cuts are the final straw for dairy farmers who have been hit by a combination of high rainfall, which means they have to keep cattle more expensively indoors, and rapidly rising feed prices.

‘Untenable’

Many farmers have already found their financial position untenable. Forty per cent of small dairy farmers have gone out of business in the last 10 years, changing the face of rural communities and, increasingly, the methods by which milk is produced.

According to the National Farmers Union (NFU), many dairy farmers are already making a “significant loss” for the milk they produce and are “angry with the system”.

On Thursday Peter Kendall, the president of the NFU, along with Farmers for Action chairman David Handley, held “crisis talks” to discuss what action could be taken ahead of 1 August , when the cuts are scheduled to be introduced.

While the NFU is planning a summit in London next week, where dairy farmers will meet Agriculture Minister Jim Paice, Farmers for Action is planning direct action centred on the disruption of the UK milk supply.

Farmers for Action chairman David Handley said these actions “could come in many forms”.

“I wouldn’t say I would target the Olympic Games,” Handley told the BBC’s Today programme this morning, “but part of our action is likely to disrupt that, and that is unfortunate but, you know, at the end of the day we are in desperation street.”

While the exact form these disruptions could take have not been outlined, some farmers have talked about pouring their milk supplies down the drain and blocking distribution.

Responsibility

All retailers have strategies in place for dealing with milk suppliers: Sainsbury’s, Tesco, Waitrose and Marks and Spencer pay above the cost of production, currently over 30p per litre.

Morrisons, Asda and the Co-op also have strategies, but they operate differently: the supermarket pays a premium for the milk, which is set above the standard price – or what the rest of the market such as discount retailers and the food service sector pays.

The problem for producers is that these schemes are not directly linked to the cost of production itself, which has risen steeply in recent months. As a result, some supermarkets are no longer paying enough to enable dairy farmers to balance their books.

The Co-op on Tuesday raised the premium they pay on milk to farmers from 1.35p above the standard rate to 2p. On Friday, a spokesperson for the Co-op told Channel 4 News: “Against a backdrop of a competitive retail market, we are doing everything we can to attempt to alleviate the pressures facing dairy farmers during these tough trading conditions.”

Ethical

The company, which prides itself on an ethical approach to trading, operates a scheme to support farmers through workshops and demonstrations on efficiency savings as well as providing contributions towards veterinary costs.

The dairy processors have blamed the deterioration in commodity markets and cream prices for their decision to further cut what for farmers are already rock bottom prices.

But the NFU has called decisions to cut prices by up to 2p per litre “a catastrophic example of hypocrisy and unfairness”, where processors are simply passing on their losses to the producers, and has called on both processors and supermarkets to take responsibility.

“It is time for liquid milk processors – and retailers and other major buyers – to take responsibility for this totally dysfunctional supply chain,” the NFU’s dairy board chairman Mansel Raymond said earlier this week, referring to the “aggressive and deflationary nature of price negotiations between retailers and processors”.

The NFU is calling for both retailers and processors to “commit to a fair and transparent supply chain”, offering farmers a “fair return” for the milk they produce.