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July 26, 2012

UK: Dairy Crest postpones milk price cut

Dairy Crest will postpone a cut to the farmgate milk price that was due to come into effect on 1 August.

Dairy Crest will postpone a cut to the farmgate milk price that was due to come into effect on 1 August.

The UK dairy processor said it is “setting aside” the 1.65 pence per litre price cut for an additional two months, although a 2ppl cut that has already come into force still stands.

Dairy Crest said it hopes the delay will provide it and its farmers time to “seek solutions” to the difficulties facing the dairy sector.

Dairy farming organisations began staging protests earlier this month in response to cuts introduced by the UK’s largest dairy processors – Dairy Crest, Robert Wiseman Dairies and Arla Foods. These cuts brought the farmgate milk price down by between 3.65ppl and 4ppl and put farmers in an “extreme loss making situation”.

However, dairy processors insisted the cuts were necessary in order to reflect the low price they are receiving for bulk cream on the global commodities market.

A spokesperson for Dairy Crest told just-food cream prices remain low. However, the delay will provide additional time for negotiations with its retail customers on milk pricing to be completed, he said.

“Two of Dairy Crest’s customers have already agreed to pay a supplement to support farmers. Although all of the additional revenue from these customers will be fed back to farmers it is not enough to completely reverse the previously announced cut. However, in the short term, while discussions with other customers are ongoing, Dairy Crest will make up any shortfall itself,” the company said in a statement.

The dairy processor has also signed up to a voluntary code of practice that attempts to address the imbalance of power between dairy farmers and processors. New contract terms include provision to give farmers longer notice periods on any price changes and the appointment of an independent consultant to review the pricing mechanism determining the company’s farmgate milk price.

Mike Sheldon, milk procurement director, said: “We are in no doubt about the difficulties that the farmers affected by the forthcoming August price cut have been facing.  Our bold move to set aside this cut for two months will allow us to continue to work with our farmers to find long term solutions. We remain committed to paying fair milk prices – a commitment fully demonstrated by today’s decision.”

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