"Farmers need a slice of the £19m dairy processors have gained from the market"

Friday 09 July 2010

NFU's Cheshire Dairy Board representative reminds the processors not to forget the people who actually produce the liquid milk, cheese and cream.

Following the publication of the NFU’s report ‘The Great Milk Robbery’ last month, Cheshire farmer and NFU North West Dairy Board member, Rob Ford, is again calling for dairies to pass on the increases in the commodity prices to producers.

The report highlighted that the total revenue to processors from dairy commodities in May 2010 was £19 million higher than in May 2009, equating to an increase of 4.3 pence per litre (ppl). Revenue from cream was £34 million higher in 2009 compared to 2008 and so far in 2010 a further £36 million has been received from cream sales compared to the same period in 2009. Cheese prices have only recently started to rise but have increased by £13 million in the past three months.

Rob, who sits on the NFU North West Dairy Board and farms in Brindley near Nantwich, said: "The figures show that we are supplying milk in a dysfunctional market. In the same period the average farmgate milk price for the UK increased from 23.25 ppl in April 2009 to 23.56 ppl in April 2010, an increase of just 0.31 ppl.

"If markets remain at their current level, this will rake in an extra £57 million in total revenue to processors every quarter. We also need to remember that there is a massive variation in the price that farmers receive for their milk, ranging from just over 20 ppl to more than 27 ppl with many supplying commodity markets towards the bottom of the scale.

"Given that the report highlights an extra 4.3 ppl has been delivered from the commodity market in that time, those farmers who supply commodity dairies, such as cheese producers, are asking where all of this extra revenue has gone."

Rob is calling for the dairies to pass on more of this extra income to give farmers confidence to invest in their businesses and secure supply.

"Since the launch of the report a number of dairies have increased their prices for June and July, including Arla, First Milk, Muller and Meadow Foods. However, there are a number of dairies who are notable by their absence," added Rob.

"What is really needed is greater market transparency and price information about the activities upstream in the supply chain. This can only be delivered by better contracts and a fairer balance within the supply chain."