Dairy farmers threaten to quit as First Milk withdraw Monday's payments

Dairy farmers across the UK have threatened to quit as market problems continue, as First Milk decided to delay payments to farmers from today.

First Milk also decided to reverse the 1.1 pence per litre of the planned February milk price reductions for the manufacturing and liquid pools, increase members’ capital investment and increase members’ capital investment target from 5 to 7 pence per litre.

The leader of the Shropshire Council decided to write to Sir Jim Paice, chairman of First Milk, to express concerns about the 'devastating impact' on farmers within that council.

"We have been extremely concerned to learn of the pressure which has now been placed on dairy farmers who are members of First Milk, as a consequence of deferring their payments for supplies of milk and reducing their net payments through capital contributions and price cuts.

"The feedback we have had from farmers is that these policy changes within First Milk will have a devastating impact on farmers’ cash flow and the future sustainability of their business.

"We recognise that these actions are a consequence of extremely volatility on the global dairy market and we will be speaking to stakeholders in the county, such as agricultural suppliers and banks, to encourage an understanding and sympathetic approach to transactions with farmers impacted by market volatility and the actions of First Milk."

DairyCo is offering consultant support, funded through the levy, to help assess the immediate impact from the potential cash-flow challenges from the current market situation. The aim of this DairyCo offer is to help levy payers define an approach for the coming weeks and months.

Action by supermarkets, dairy processors and governments is desperately needed in order to boost dairy farm incomes and confidence, Farmers' Union of Wales president Emyr Jones.

"We have gone from guaranteed prices to the watering down of the CAP and now quota abolition is imminent. Many want a further acceleration in the form of the complete dismantling of the CAP and complete exposure to global price volatility.

“But there is no real ‘Plan B’ which reflects the importance of protecting food producers and ensuring food security, and unless action is taken to recognise this I fear we are slowly opening Pandora’s box at a time when food trade wars and the threat of terrorism should place the issue very much at the centre of the EU’s agenda."

David Handley, chairman of Farmers for Action, said: "We must be positive going forward, but don't for a minute believe we're in a scenario where we can sit and wait. If we don't stand up and fight for the industry, we will lose it."

"Without a substantial improvement in the price of milk - I'll need to come up with an exit strategy."

Handley's speech comes as the number of dairy farmers in England and Wales halved in just over a decade.

60 farmers gave up producing milk in December alone, a rate which will see fewer than 5,000 dairy farmers left by 2025, the NFU said.

NFU President Meurig Raymond also addressed the Semex Conference, he said the recent milk price cuts have had a massive impact, with some farmers now facing their lowest prices since 2007.

"This has left many producers under extreme financial pressure and fearing for the future of their dairy businesses."

Raymond said milk has now fallen below the price of bottled water as many producers relay solely on subsidies from the European Common Agricultural Policy.

Environment Secretary Elizabeth Truss also talked about the plight of the dairy industry in her speech at the Oxford Farming Conference. She sad the industry will continue to face global market difficulties in the coming months.

"We are working very closely with the NFU and I have met Dairy UK about how to help farmers manage this situation. At the Dairy Supply Chain Forum in November, George Eustice agreed a set of actions that will ensure we do all we can to help this industry.

"This means doing things like making sure dairy farmers receive full support from the £141 million Countryside Productivity Scheme under the Rural Development Programme, which is targeted specifically at helping farm businesses become more competitive.

"We are also encouraging the use of longer contracts with buyers to give farmers added security.

"The Rural Payments Agency is ready to take applications from new organisations for formal recognition, so dairy farmers can come together in producer organisations to give them a stronger bargaining position."

The number of dairy farmers in England and Wales dropped below 10,000 'and we can't afford to lose any more', said NFU dairy board chairman Rob Harrison.

Reflecting on the past 12 months for the industry, Mr Harrison said the frustration demonstrated in recent months was justified with dairy producers struggling to make ends meet.

“I am as angry and disappointed with the recent milk price cuts as everyone else here – it’s been a real kick in the teeth. Things are bad and we’re all going through some tough times. For the first time this month we have dropped below 10,000 dairy farmers in England and Wales and we can’t afford to lose too many more. I also know a number of farmers are on notice for next spring and I am in touch with all the main milk buyers to make it clear what is acceptable and what isn’t when it comes to contracts,” he said.

Deputy Minister for Farming and Food, Rebecca Evans said: "

“I have spoken to farmers who tell me how concerned they are about what the deferred payments mean for the cash flow of their farming businesses.

"I sought an urgent meeting with First Milk to better understand how the co-operative had found itself in this position, and to satisfy myself that the suite of actions taken by First Milk will be enough to put them on a sound footing.

“First Milk say that the actions they have taken have helped to raise enough capital to stem their own cash flow problems and put the business on a sound financial footing once again.

“Sir Jim assured me he had spoken with the banks in light of their decision and had found them to be sympathetic to the farmers’ situation."