UPDATE: UK: Dairy farmers planning producer organisations

Dairy farming organisations are working on long-term plans to address an imbalance of power in the supply chain, the National Farmers Union has told just-food.

Carl Hudspeth, the NFU representative in Lancashire, said the union is working on ways to win producers greater power in pricing negotiations.

"The longer term plan is to create stronger producer organisations," he said today (16 July). "It is very much in the infant stages: the NFU has just began engaging with members to try and collect notices of interest... The industry now is so fragmented - which is why we are in the problem that we are in - we don't know who is selling to who. There is a lot of market intelligence going on."

By forming producer organisations through which farmers would be able to collectively sell their milk, the farmers hope to gain "more negotiating power" and "stronger contracts", he added. "Our ideal would be that you have a contract that states that you can't get paid below the cost of production. That is a big ask."

The UK government has made GBP5m (US$7.8m) available to support the development of producer organisations.

Nevertheless, with the price farmers are being paid for milk currently below the cost of production, the short-term goal of reversing a series of recent price cuts is at the forefront of many farmers' minds.

Dairy farmers have had to contend with a series of cuts to the price they are paid for milk that, farming organisations have insisted, take the milk price below the cost of production. In May and June Dairy Crest, Robert Wiseman and Arla Foods slashed the base price they pay farmers for milk by two pence per litre. Then, earlier this month the country's largest dairy firms announced further cuts, which look set to take the price farmers are paid for milk down by a further 1.65-2ppl.

In an attempt to raise consumer awareness of their plight, farmers staged "a number" of "spontaneous protests" throughout the country this weekend. The union is still collecting data on the number and location of protests.

In Lancashire, protesters - farmers and the local Women's Institute - gathered outside five Asda and Morrisons stores on Saturday (14 July).

The protesters asked consumers to tell the supermarkets if they thought the farm-gate milk price should be raised but did not ask consumers to boycott the stores, Hudspeth said. He added Asda and Morrisons were targeted because "they are the ones buying at below the cost of production".

"These are sporadic protests from frustrated farmers who want support from their union and they have decided to do it themselves," Hudspeth said. "Frustration is boiling over."

At a meeting in London last week, farming organisations gave a deadline of 1 August for farm-gate price reductions to be reversed.

If the dairy companies fail to raise prices by this deadline, Hudspeth said protests will become more organised and widespread as the NFU and other farming organisations throw their weight behind them.