First class product but second class price

’Welsh dairy farmers are producing a first class product but being paid second class prices – and as a result more farmers are leaving the industry in Wales than in other parts of the UK.’ That’s the sad but true message coming from NFU Cymru at this year’s Welsh Dairy event at Nantyci, Carmarthen.

NFU Cymru has been encouraged by developments in the liquid milk sector that now means nearly a quarter of Britain’s dairy farmers are involved in some form of dedicated supply chain relationship - yet only a handful of these producers are located in Wales.

NFU Cymru Milk Board Chairman, Maurice Jones said, "There is a huge range in the milk price paid to dairy farmers and increasingly between those who are fortunate enough to be offered a retail contract and those who are not. Too many of our producers find themselves sitting at the bottom of milk price league tables when the quality of the milk they produce is second to none.

"I commend the progress retailers have made to build supply chain relationships for liquid milk, but very little effort has been made to demonstrate a similar commitment to dairy farmers whose milk is destined for cheese production. It is estimated that up to 80% of the milk produced in Wales is converted into cheese and with a price differential of up to eight pence per litre less it doesn’t take a genius to work out why we continue to see a high exit rate from the Welsh dairy sector."

Figures show that in the year to September 2010 a further 115 producers left milk production in Wales a reduction of 5.5% compared to a reduction in producer numbers in England of 3.5% over the same time period.

Picking up on the issue of poor producer returns, NFU Dairy Board Chairman and Pembrokeshire dairy farmer, Mansel Raymond said, "Recent work by DairyCo has shown that last year the retail gross margin on milk, mild and mature cheddar increased while processor margins and farmgate milk prices fell. These latest figures are a complete vindication of the NFU’s Great Milk Robbery report. As ever, dairy farmers are the big losers and are yet to see their fair share of better market returns."

Mr Raymond concluded, "I don’t wish to put all the blame at the doors of the major retailers because I believe that there are other large purchasers of milk that must also play their part in taking greater responsibility for their dairy farmer suppliers. Ultimately, without confidence in the dairy industry and a milk price that allows farmers to make a fair profit and re-invest in their businesses then milk production could drain away from Wales."