The National Farmers Union has suggested the reversal of recent price cuts implemented by dairy processors should be funded “from retailers margins”.

Dairy farming organisations have unified in their call for price cuts introduced by the country’s largest dairy processors – Dairy Crest, Arla Foods and Robert Wiseman Dairies – to be reversed. The cuts totalled 3.65-4 pence per litre and have pushed dairy farmers into a “severe loss-making situation”.

UK retailers pay a premium for milk supplied to their dedicated milk pools. However, the level of payments varies considerably. The likes of Tesco and Sainsbury’s make a payment based on a cost model, while Morrisons, Asda and The Co-operative Group pay a flat premium that, farmers claimed, does not meet the cost of production.

According to the NFU, the reversal of the farm-gate milk price cuts should be funded by retailers who currently fail to pay above the cost of production.  

“Tesco and Sainsbury’s buy, bottle and supply milk while paying a sustainable price. Why can’t other retailers do the same? We would like a strategy in place that would ensure sustainable liquid milk supply,” a spokesperson for the NFU told just-food.

Asda announced earlier today (17 July) it will increase the price that it pays farmers for liquid milk from 1ppl to 3ppl. However, the move was subsequently slammed by Farmers for Action as it still fails to bring the price the retailer pays for milk above the cost of production.

The NFU described the move as a “step in the right direction”, but emphasised it only compensated for half of the announced price cuts. “It is at least 2ppl below the cost paid by Tesco and 3ppl below that paid by Sainsbury’s,” the spokesperson emphasised.