A former chairman of the Farmers' Union of Wales milk and dairy produce committee today expressed disappointment that two leading dairy companies are dropping the price they pay farmers for their milk.
"We are disappointed that milk prices are dropping just as the industry is beginning to get back the confidence it needs to invest in a better future," said Eifion Huws, who runs a dairy farm at Bodedern on Anglesey.
Today Arla announced a drop in the price it will pay to farmers of 1.27ppl - taking effect from Monday (April 28) - which reduces their standard litre price in the UK to 33.74p per litre (ppl).
And Dairy Crest recently announced a 0.435ppl reduction in its May formula contract options - rebased from the April position - that will take the core formula to 32.315ppl and the simplified formula to 32.125ppl. DC’s current standard litre price is 32.56ppl.
Mr Huws said they both expressed support for the industry's voluntary code of practice published in October 2012. One of its main objectives was that dairy farmers would get 30 days notice of any price change.
"But Arla does not accept the 30-day notice objective for some of its suppliers and the fact that they are able to drop the price within four days - while the other companies adhere to the code - shows there may be a strong case for legislation on this issue."
Last May the FUW welcomed a recommendation by the Commons Welsh Affairs Committee stating that the code must be given a chance to work but, if tangible improvements are not forthcoming, the Government must be prepared to legislate.
"We supported the introduction of the code and were willing to give it a chance but it now seems we still need to look at whether some form of legislation could be swiftly introduced if it is not working as intended," Mr Huws added.
"Even in May last year evidence was emerging about processors opting out of the code, in full or in part, and we believed then that the threat of legislation would help push the code forward.
"Admittedly, the code's ability to work for every producer to the same degree is probably limited but we still have concerns that purchasers are cherry-picking elements that they want and leaving producers in a worse position."
According to Welsh Government statistics the number of dairy farms in Wales reduced by nearly 900 from 2,727 in 2006 to 1,845 in 2012.