12 October 2010

2 minute read

Europe

NFU Cymru’s Milk Board met recently and DairyCo’s annual dairy supply chain margins report provided a good background for their discussion on the market place. NFU Cymru’s Milk Board Chairman Maurice Jones said, “The DairyCo margins report shows supermarkets are making growing profits from milk and dairy products at the same time as the majority of dairy farmers continue to receive a price for their milk that sits well below the true cost of production. Over the 2009/10 milk year, the farm gate price dropped by 2ppl compared to the previous year. Retail gross margins though increased over the same period.

“These latest figures are a complete vindication of the NFU’s Great Milk Robbery report. As ever, dairy farmers are the big losers and have yet to see their fair share of better market returns. During 2009/10 retailers were able to grow their margins at the expense of processors and farmers, who both suffered a fall in gross margins and despite there being no increase in prices to consumers.

“The lack of an increase in dairy producers’ prices also backs up the Union’s report, which suggested that money which should be returned to dairy farmers has been used to compete for retail business, and that the level of promotional activity in the liquid milk and cheese sectors has taken value out of the supply chain for everyone but the retailers. This adds further weight to the argument that farmers should not be forced to pay the price of ruthless milk promotions, and perhaps indicates a market correction of inflated retail shelf prices.”

“The publication of DairyCo’s report is also very timely given the challenging questions NFU President Peter Kendall posed to the major buyers and retailers at this year’s dairy event. As the NFU awaits the final few responses to those questions we will be considering the answers we receive against the information in the DairyCo report. It will also add weight to the Great Milk Debates in November, which will seek to challenge retailers and milk buyers on their activities and stress the need for greater supply chain responsibility and transparency.”

“Despite the slight milk price increases farmers have received since June there is a definite lag which DairyCo highlights in detail in their report. There is certainly more money to come to farmers, the question is why has it taken so long and will farmers get their fair share?”

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