27-07-2012 08:50 AM | Cattle, Dairy, Market Reports, News

Dairies pledge to scrap price cuts amid pressure



Dairies pledge to scrap price cuts amid pressure
Moves by dairy buyers to reverse the milk price cuts planned for August 1 has been welcomed by farming unions but they warned the British dairy industry needs to be more sustainable.

Farmer co-op, First Milk, has today announced it has withdrawn plans to cut its milk price to liquid and balancing producers in August. This move has been quickly followed by Dairy Crest announcing a two month stay of execution on its planned 1.65ppl price cut. Arla is expected to make an announcement tomorrow, Friday.

Farmers feared that price cuts will force them out of business and drastically reduce the dairy industry in the UK.

Robert Wiseman Dairy, now owned by German company Müller, has also agreed to scrap its planned milk price cut today.

After more than two weeks of campaigning by the dairy coalition, the last targeted milk processor agreed to drop its planned price cut of 1.7ppl, leaving its price to dairy farmers at 26.43ppl.

“I am immensely proud of what the coalition has achieved so far,” said NFU Deputy President Stephen James.

“In a little over two weeks we have seen the Co-operative, Morrisons and Asda agree to pay their farmers a price that covers their costs of production."

“With today’s announcement by Wiseman/ Müller, joining First Milk, Dairy Crest and Arla from yesterday, I am also pleased to say the planned milk price cuts by all of the major dairy processors have now been rescinded before the August 1 deadline. This was one of our key goals when we set out and we have achieved it.

“This will bring some relief to dairy farmers who supply liquid milk to Arla, First Milk, Dairy Crest and Wiseman/ Müller. But we will continue working hard behind the scenes to ensure these first steps turn into a longer-term, sustainable milk price for all dairy farmers. This can’t be a short-term fix.

“So, for the coalition the work continues. I am conscious that the milk price cuts from June are still in place but rest assured we will continue in talks with the processors to work towards returning that lost money. We will meet to discuss next steps.

“I thank everyone; farmers, members of the coalition, and shoppers for their support. We could not have done this without them.”

The Tenant Farmers' Association welcomed the move by major milk processors to rescind recent price cuts.

TFA National Vice-Chairman, Stephen Wyrill said "these announcements represent a great first step but there is still much to be achieved. The work of the coalition of farming organisations will continue to achieve a much better basis for the long-term marketing of milk”.

“The support from consumers and from those who supply products and services to the farming community has been tremendous. This is all about rural communities, the rural economy and ensuring that we can deliver a first-class quality product to consumers. Whether it is the feed firms we do business with or the banks that we borrow from we will continue to need their support. Together with consumers and grassroots pressure from farmers we will move into the next phase of the campaign."

“Whilst we have seen the removal of the threat of the August price reductions there is still the issue of the May price reductions to discuss as well as putting flesh on the bones of the heads of terms agreed for the voluntary code. The discussions on those will start right away,” said Wyrill.

Since the Dairy Summit held in London by NFU, FFA, the TFA, and the WFU, dozens of protests have taken place outside dairy processors and supermarkets up and down the country. The campaign has also received support from several MPs and celebrity chefs.

“Farmers, their families and shoppers have supported this campaign to see a fair price paid to our dairy farmers. It has been an amazing show of strength and support" said NFU President Peter Kendall (pictured).

“I’m really pleased that farmer co-op First Milk has shown huge leadership and resolve today in sticking its neck out and announcing it will rescind its planned milk price cuts from August 1. Dairy Crest has followed by announcing a deferral of its planned cuts although it’s important to see this made permanent. And I am hoping to hear positive news from Arla tomorrow.

“There has been some fantastic work by a number of organisations and individuals on this issue in the past two weeks but we can’t – and won’t - take our eye off the ball. We are calling for the retailers Iceland and Farmfoods to ensure they start to pay a price to their milk suppliers that covers the cost of production. And all eyes are on the milk processor Wiseman / Muller to rescind its planned milk price cut before August 1. The pressure on this company’s brands must be felt after today’s announcements by its rivals.

A "broad" agreement regarding a voluntary code of conduct was made in London between the parties. The code is designed to govern relationships between dairy producers and buyers in an attempt to make the industry more sustainable.

The heads of terms establish a number of minimum requirements and new provisions for dairy contracts between farmers and milk buyers.

The code stipulates that dairy farmers must receive at least 30 days’ notice of a price change and retrospective price adjustments are no longer acceptable.

“I believe only with all areas of the supply chain playing their part can we turn this situation around. I am committed to ensuring our dairy farmers have a secure future and we will continue to work extremely hard on the challenges that lie ahead" Kendal said.

The dairy coalition will meet again in a week’s time.

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