Ruthless cuts to dairy
The NFU was extremely disappointed by the announcement of New Year milk price cuts and has described the surprise move by some processors as ’unjustified’.
Responding to news Arla has reduced its rate to farmers by 2ppl, and First Milk by 1.25ppl, NFU dairy board chairman Gwyn Jones said the foundations of an "already fragile" industry had been rocked.
He was "not blind" to world and EU commodity markets, and pressures on the cheese market from cheaper, lower quality imports.
But he said: "It’s hard to see the justification. For a large processor such as Arla to drop its price so ruthlessly and then blame it on falling commodity prices is very surprising.
"Processors, like farmers, are feeling the pinch - but with oil, fuel and energy prices falling they should have more than enough room to cope without turning to farmers to bale them out. Why have they done this? Quite simply, because they can."
Mr Jones leveled particular criticism at Arla, which he said had been "first to instigate the dragging down of a stable market to recoup its margin". This, he said, was the third time in as many months that contracts allowing short-notice cuts, without transparency on price calculation, had left farmers at the mercy of their milk buyer.
He added: "It’s difficult to talk of partnership in the supply chain when companies act like this, exploiting one-sided contract with farmers."
The news comes at what the NFU has identified as "a crucial tipping point" for UK milk production. Costs remain painfully high, with recently reported reductions in fertilizers often not fully passed on to farmers. Prices remain 75.5% higher than in December 2007.
Feed prices - a relatively small proportion of farmers’ outlay - have fallen, but are currently only £2-4 per tonne below 2007 rates.
Mr Jones announced the NFU would launch a plan to help the industry through the current difficulties in the next few weeks.
He added: "At a time when farmers are faced with the huge cost of NVZs, low calf prices, a worsening TB situation and structurally high input costs, milk price decreases only serve to rock the foundation of an already fragile industry."
