Headlines

The good news for dairy farmers emanating from the lifting of the beef export ban has unfortunately been clouded by the damage retailers are doing to the industry through cuts in the price of liquid milk - NFU Cymru President, Dai Davies, told Carmarthenshire milk producers recently.

Mr Davies was speaking to NFU Cymru members in Carmarthenshire at the farm of the Gravelle Family, Muddlescwm, Kidwelly. Farmers talked positively about the hope that barren cows and calves from the industry would now begin to gain realistic returns now that the UK was able to compete on a level playing field with the rest of Europe.

David Gravelle told members that following a thorough examination of his farming system he chose a spring calving herd which he felt suited Muddlescwm best, but he added, "I cannot see, though, how I can take any more cost out of my production system, this farm cannot continue to take further milk price cuts."

Dai Davies, NFU Cymru President, cited the continuing unchecked growth and power of the major retailers in the UK as the major problem pushing producer prices down. He said, "We have no problem with a powerful retail sector or with supermarkets making profits provided that this power is treated responsibly, unfortunately at present this is often not the case.

"In many ways the Government sees the larger retailers as a major factor in keeping inflation down. Recent retail milk price cuts have been quoted as one of the major reasons why inflation has kept low and with this being the case Government has been loath to intervene."

He continued, "With the average cost of producing a litre of milk estimated at 20.34 pence and the average price the farmer receives being, in many cases, well under 19 pence per litre there will be no let up in the number of farmers leaving dairying in Wales unless action is taken now."

Mr Davies told producers of the extensive lobbying carried out by NFU Cymru in conjunction with the NFU, NFU Scotland and the Ulster Farmers Union which has resulted in the Office of Fair Trading referring the UK grocery market to the Competition Commission for a market investigation.

Mr Davies concluded, "We have warned the OFT of the irreparable damage that is being done to the dairy industry by supermarket price wars. Ultimately if dairy farmers continue at the present rate to leave the industry because of the inability to recover costs from the supply chain, this will have an adverse effect on product choice, availability and the continued production of dairy products in the UK."

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