Don't blame supermarkets for milk crisis, says First Milk chairman Paice

The crisis in the dairy industry is not the fault of supermarkets, according to First Milk Chairman Sir Jim Paice, who was speaking to NFU members in Pembrokeshire recently.

"It is tempting to blame the supermarkets for the current downturn," he said.

Paice said the fundamental problem with the dairy industry is that there is too much milk on the market.

"We have seen an approximate increase of 10% of milk produced in the UK alone this year.

"That has been exacerbated by two things, China dramatically reduced its purchase of milk powder and then Russia introduced its trade ban, which included dairy products.

"With a third of EU cheese exports going to Russia - that was the final straw and that's why our milk prices are where they are."

The EU exported 23% of its dairy products worth £1.8bn to Russia, until trading was forced to cease in August.

A group of MPs have recently urged the government to increase protection to dairy farmers who are becoming increasingly vulnerable to fluctuations in prices.

The commissioned report said fining supermarkets for low prices and increasing the remit of the Groceries Code Adjudicator offered adequate protection.

The leader of the Shropshire Council wrote to Paice to express concerns about the 'devastating impact' on farmers within the 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.

"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."

Paice said: "It has resulted in a very serious situation throughout the country at the moment, particularly here in south west Wales where milk is obviously a hugely important industry.” Sir Jim Paice informed Pembrokeshire NFU Cymru dairy farmer members who attended the meeting.

He used the meeting to assure those farmers that supply First Milk that the co-operative was here to stay and everybody is getting paid for the milk they have produced. He insisted that First Milk was in a very very strong position now, the strongest it has been for many years, and it should be strong enough to withstand the volatile next few months ahead.

John Davies, NFU Cymru President and Euryn Jones, Agriculture Manager for HSBC Bank, the conference’s sponsor, both agreed with Sir Jim that we were witnessing extremely volatile times at the moment in dairy, as well as other sectors of farming, and both agreed NFU Cymru and the bank were there to help assist members and customers any way they can to get them through the volatility. John Davies said, “What we all want is a fair price from the market place for what we produce.”

Sir Jim is currently the Conservative’s Member of Parliament for Cambridgeshire but he is due to stand down at the forthcoming General Election this spring. A Suffolk farmer, farm manager and training manager, Jim Paice was in the position of Minister of State at the Department for Environment, Food and Rural Affairs in 2010 when negotiations first started on the current CAP reforms.

Reflecting on his time as Minister he said that we’ve ended up with a Common Agricultural Policy (CAP) which is pretty similar to what was originally proposed. He explained, “I’m not saying that means the first proposals were right, what I’m saying is that it was very difficult for 28 very different countries to agree. Discussions were impossible when each Minister from each Member State was given just three minutes to give their views on the proposals. It ended up with each Minister giving set speeches – not a discussion!”