The chairman of the NFU dairy board has expressed disappointment following the latest round of milk price cuts.
Dairy companies First Milk and Dairy Crest will be cutting the price paid to farmers by January, a reduction of 1 pence per litre and 1.25 pence per litre respectively.
Dairy Crest and First Milk have today announced further price drops from January 2015.
NFU dairy board chairman Rob Harrison said: “Although the fundamentals of the global supply and demand situation haven't changed this latest price slash is another kick in the teeth and comes at the expense of the average dairy farmer who is now making a significant loss for every litre of milk they produce. There are many farmers that have invested heavily over past years and are now suffering.
“I do understand the market fundamentals but ask this: Why do farmers never get the market highs when global commodity prices are at their highest but suffer more than they should when commodity prices hit the floor?
“While the global market situation remains difficult, we need UK processors and retailers to support our farmers in ensuring a long term sustainable future for domestic milk production.
“The NFU will continue to raise farmer issues with milk buyers, retailers and banks, speak to Government to ease the impact of market volatility for dairy farmers and lobby in Europe to ensure that intervention and PSA are workable tools.”
Chairman of First Milk, Sir Jim Paice MP said the market for dairy products has declined since the start of November.
"In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further," he said.
"During the last few weeks, the Board and myself have met more than 650 producers and their families at large and small meetings around our milkfields. We have been encouraged and humbled by the determination of members that we all work together to get through this current trough."
Commenting on the price moves Mike Sheldon, Dairy Crest Group Procurement Director, said: “I understand this will be disappointing news for our farmers who were hoping, like us, that the situation might have started to improve. I was pleased to agree the price hold for December, providing some respite for our farmers, but cannot continue to maintain the price against the backdrop of such extreme market volatility and increasing levels of milk production.
“Our process for reaching this pricing decision with DCD has been very detailed, which is why we have run beyond the month end. We have been continually reviewing all the factors that impact the price and exploring different approaches. Whilst we are all operating in a very challenging market, I am confident that our offer to farmers is competitive. We also remain committed to providing 30 days’ notice of any price change, which is why this move is effective from 3rd January.”
Campaign group Farmers for Action predicted 'very gloomy times' for dairy farmers in August this year.
"In our view there is only one sector to blame and that is dairy farmers. We need to stand up and stop the decline in our milk prices unless you all feel as dairy farmers you can produce milk 365 days a year at prices below 25p because believe us that is where we are heading and we will be brave enough to predict that by December, we will see at least another 3p off milk prices if we do not do anything."
