Dairy Farmers Call For Fairer Milk Contracts

WALES, UK - "It is patently obvious that our dairy supply chains are not functioning properly and farmers are not receiving a milk price which fairly reflects the current marketplace," said NFU Dairy Board Chairman, Mansel Raymond, at a recent NFU Cymru Dairy Strategy Roadshow in Pembrokeshire.

3 May 2011

3 minute read

Europe

Sponsored by Barclays Bank, the meeting was one of a programme of events held throughout Wales where Mansel Raymond and NFU Dairy Adviser, Sian Davies, outlined the Union’s supply chain lobbying activities and priorities and its on-going work to secure better milk contracts for farmers.

Mansel Raymond said: “The dairy sector is undoubtedly going through a very challenging period at present. Whilst milk prices have moved up slightly over the last 12 months these price increases have been eroded by the increasing costs of milk production.

“The Cost of Milk Production report published by the Union earlier this year shows the average cost of production is around 30 pence per litre, whereas the current average UK milk price of only 26 pence per litre is nowhere near enough to even cover costs, let alone to allow us to re-invest in our businesses.

“The main reason that dairy farmers are struggling is because of the one-sided nature of milk contracts that offer very little certainty or clarity on the way that milk prices are calculated. Unless drastic action is taken then milk production in this country will continue to fall and more dairy farmers will decide to leave the industry.

“We’re heartened that the European Commission has recognised that the contractual relationships between milk producers and purchasers are essential to guarantee a fairer deal for farmers within the dairy supply chain. There are some exciting proposals on the table that would significantly strengthen the position of dairy farmers within their supply chains. However, we need both the Welsh Assembly Government and UK Government in Westminster to grasp the nettle and take the required action that’s needed to stop the current unfair commercial practices and to give their backing to a move towards fairer milk supply contracts.”

Roger Lewis, Pembrokeshire NFU Cymru County Milk Chairman said: “There’s a desperate need to address the economic sustainability of the UK dairy industry. Every conversation I have with farmers about the problems in the dairy industry always comes back to milk price. Milk buyers, processors, retailers and governments have to acknowledge this and act now to ensure fairer and more sustainable milk contracts that are fit for purpose so that we as milk producers can receive a fair share of the margins that exist within the supply chain.”

NFU Cymru Deputy President, Stephen James, who addressed all four meetings said: “We’re grateful to Barclays Bank for sponsoring NFU Cymru’s Dairy Strategy Roadshows which has provided an ideal opportunity for members to contribute to what the Union is seeking to achieve in respect to the milk sector, not least in terms of milk price.

"I’ve been encouraged by the number of young dairy farmers that have attended these Roadshows and NFU Cymru will strive to ensure that we do everything within our powers to ensure that they have a long and prosperous future in dairy production.”