Alun Davies: Shoppers must not pay for dairy inefficiency
The consumer must not prop up inefficient dairy farmers by paying more for milk, said Wales’ agriculture minister Alun Davies in a blunt message to producers.
Speaking at the DairyCo conference in Llanelli, Carmarthenshire, he said cost control was the key to profitable milk production – but that a wide gulf existed between the most and least efficient farmers.
“I don’t see why the consumer should pay more milk because of inefficiencies in production,” he said, adding that a litre of milk on the least efficient farms cost 12p more to produce than a litre on the best performing units.
“That is far too great a gulf,” he insisted. “We need to have a milk price where people who are efficient are rewarded with good profits but not at a milk price that is so high that it subsidises inefficiency.”
Poor weather and price volatility had been two key challenges to resilience in 2012 but the minister warned of the inevitability of those challenges being repeated in future years.
His stark warnings came alongside another from Louise Welsh, agriculture manager of Morrisons who said the loyalty of consumers to British-produced milk only extended to stores that priced it competitively.
“I don’t see why the consumer should pay more milk because of inefficiencies in production.”
Alun Davies, Welsh agriculture minister
Price remained the key driver for milk sales and shoppers continued to shop around for their milk, she said. Supermarkets have been accused of driving down the milk price but Ms Welsh defended their position.
“If we start selling milk that is dramatically more expensive than our competitors our customers will simply go elsewhere,” she insisted. Cut-price deals on fresh milk continued to draw shoppers into discount stores and she also warned that customer loyalty to British cheese was also price sensitive.
“Customers must see British cheese as value for money or they may look for cheaper imports. We wouldn’t want a situation where British food becomes too expensive and people opt for cheaper imports. It is important to us that food is affordable.”
She said Morrisons was keen for its farmer suppliers to be competitive and it was working with First Milk to encourage producers to get more milk from forage.
Mr Davies wants to see more producer organisations established in Wales to deliver better contractual terms to milk producers. He also thinks more can be done to create jobs in the dairying sector, in part by increasing the volume of milk the country produces.
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