Dairy Event 2010: NFU issues milk price warning to processors
The dairy sector could be heading for a “winter of discontent” unless processors give farmers a fairer share of improved market returns, the NFU has warned.
Speaking on the opening day of the Dairy Event and Livestock Show, NFU president Peter Kendall said that two months on from the publication of its Great Milk Robbery report, there had been little improvement in farmgate prices and the case for a rise was just as strong.
“Our report challenged milk buyers on why dairy farmers were not getting their share and it is very disappointing to say that the responses we’ve had so far do not go far enough.
“The only consistent message coming from milk buyers is that everybody else is to blame. British dairy farmers deserve a better explanation.”
Mr Kendall said he had written to milk buyers and retailers this week demanding answers to four key questions (see below) and the conclusions would be published to highlight those who had not engaged in the debate.
The case for a substantial price increase had been strengthened by the recent rise in costs, particularly feed and fertiliser, NFU dairy board chairman Mansel Raymond added. “We know we’re at least 2p/litre off where we should be.”
He acknowledged that some dairy companies could be waiting until the next Tesco/Promar cost-tracker milk price was announced, but urged all buyers to set their own sustainable prices. “Tesco has its own system for setting prices, but that should have nothing to do with what others do,” he said.
“The price differential of 5-6p/litre between the top and bottom prices is not acceptable. The bottom prices have got to come up, because even the guys at the top aren’t getting any more than their European counterparts.”
Latest DairyCo figures show that there was almost a 6p/litre difference between the average UK farmgate price (24.1p/litre) in July and the August market indicator Actual Milk Price Equivalent (29.6p/litre), which measures a processor’s return for processing raw milk into butter and skimmed milk powder.
“AMPE is down slightly, but it’s still almost 30p/litre,” DairyCo’s David Swales said. “The gap is wider than it should be, but I expect farmgate prices to gradually catch up with AMPE.”
NFU questions for milk buyers and retailers:1. Why have British dairy farmers still not received their fair share of improved market returns? 2. As retail margins on milk and cheese increased again in 2009/10, can retailers guarantee that farmers won’t end up paying for what we see as damaging promotions? 3. How can retailers reassure farmers that retendering their liquid milk contracts will not jeopardise the relationships that they have built up with their dedicated farmer suppliers? 4. Commodity markets: How long will it be until we have one farmer-controlled processor, producing the vast majority of these products in Britain in order to ensure maximum profitability? |
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• For more from the Dairy Event and Livestock Show click here.
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