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January 7, 2009

UK: Row bubbling over milk price cuts

Farmers’ union Dairy Farmers of Scotland has attacked some of the UK’s largest dairy processors over their simultaneous decision to cut the price paid to farmers for raw milk.

Farmers’ union Dairy Farmers of Scotland has attacked some of the UK’s largest dairy processors over their simultaneous decision to cut the price paid to farmers for raw milk.


Arla Foods has cut its payment to farmers by 2ppl while First Milk reduced payments to suppliers by 1.25ppl.


To the average milk producer these price cuts are likely to represent a drop in annual income of around GBP20,000 (US$30,088), DFOS’s Iain Smith told just-food today (7 January).


“That could be the difference between being in the black and in the red,” Smith said.


The price cuts are likely to drive an increasing number of farmers out of the dairy sector, Smith warned.


Announcing this latest round of price cuts, dairy processors cited the fall in the price of milk on the global market and an increase in imports. However, DFOS has questioned this justification.


“The UK should be buffered from EU and world milk prices, because we don’t produce enough to supply the UK market,” Smith said. This, coupled with the current weakness of the pound, should support current prices, the union argued.


Indeed, Smith added, there is a suspicion in the dairy community that the price cuts could have been sparked by pressure from retailers on dairy companies to deliver cheaper products.


“Why, all of a sudden, have these simultaneous cuts been introduced? There is a very strong feeling among farmers that they are retailer driven and farmers are concerned that they are the result of collusion [between dairy processors],” Smith revealed.


While he declined to rule out the possibility of UK famers taking collective action similar to that seen recently in continental Europe, Smith called on the government to intervene to secure the future of the UK dairy sector.


“The government is ultimately responsible to ensure a safe, reliable food supply,” he said.


The establishment of a retail ombudsman and clearer labelling would help shore up the sector, Smith suggested.


“As things stand, the future isn’t very bright for UK dairy farming,” he concluded.

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