First Milk and Dairy Crest announce milk price cut

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.

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.

"We are working on a number of measures that will help us to manage future volatility and better align milk production and demand. We will make an announcement on this as soon as possible."

Dairy Crest also announced a cut for farmers on their Davidstow and standard Liquid contracts from 3rd January 2015.

· For farmers on a Davidstow contract this takes the price to 27.79* ppl for a standard litre from 3rd January 2015.

· The Liquid milk price for farmers with all or a proportion of their milk price on the standard Liquid contract will be 25.79* ppl.

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."

In October, with mounting concern over the falling milk prices on global markets, NFU Cymru Milk Board Chairman, Aled Jones, sent out a plea to processors, retailers and policy makers in the UK and the EU to work together to safeguard a future for milk producers, at an NFU on farm meeting in Glamorgan.

Abi Reader, Glamorgan NFU Cymru County Chairman said, “With milk becoming an increasingly volatile industry we know we must focus on progressive and achievable targets to improve the performance of the herd. Investing in infrastructure and technology is key to this. We are very thankful to have a cost of production contract with Sainsbury’s offering some financial stability during this period. We need to see more farmers being offered the opportunity to be able to manage price volatility through similar contract types.”

Aled Jones said, “We are all in this industry together. We are trying to make Governments at all levels understand that agricultural is a long term industry requiring long-term policies. Projects such as this dairy unit at Goldlands farm is a long term investment and it is encouraging to see the Reader family’s commitment to the sector."