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Farm-Gate Milk Prices Still Behind Europe

27 September 2011
National Farmers Union

UK - Despite growing worldwide demand for milk and dairy products, UK milk producers are still seeing prices that are three to four pence per litre (ppl) down on their European counterparts.

National Farmers Union (NFU) Cymru Milk Board Chairman Maurice Jones said it was simply not an option for farmers to go on seeing farm-gate milk prices which had no relation to the value of dairy products or to farm costs.

“The situation has not improved in recent months as we would have expected. We’ve seen a bit of upward movement in farm-gate prices but farmers are expecting a lot more. The European average farm-gate milk price is 31ppl and the Average Milk Price Equivalents (AMPE) and Milk for Cheese Value Equivalents are both over 32ppl. Yet, the average UK farm-gate price at just over 27ppl still languishes well below these indicators,” Mr Jones said.

The Union has also made it clear that the industry needs to see a shift away from buyers having the discretion to make fundamental changes to business terms, such as price and pricing schedules, without proper consultation or transparency.

NFU Cymru Deputy President, Stephen James, said: “Recent price increases are not enough and it is deeply disturbing that some of these announcements by Wisemans, Dairy Crest and Glanbia have been coupled with changes to milk pricing schedules. These changes include key terms and conditions for milk composition and quality payments and the likelihood is that many producers won’t actually achieve these price increases in full.”

“This practice by the processing industry of making substantial changes to farmers’ contractual terms and conditions at the discretion of the purchaser is something that we desperately need to move away from if farmers are to have faith in contracts and their supply chain relationships. Farmers need transparency, consultation and a balanced negotiation on key issues like pricing schedule adjustments."

“Farmers are crying out for a meaningful increase in their farm-gate milk price. Producers are facing an extremely tough autumn and winter. Forage stocks have been depleted following a dry spring and feed, bedding and energy costs are all extremely high."

"With market indicators such as AMPE above 32ppl and production costs typically in excess of 31ppl, we know that milk producers are expecting a lot more to come. The current UK farm-gate price of 27ppl is unsustainable. This is my clear message to the processing sector,” Mr James added.

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