Ruthless Price War is Decimating UK Dairy Farms

UK - The latest raft of milk price reductions will hit already struggling dairy farmers hard, the NFU has said.
calendar icon 26 January 2016
clock icon 2 minute read
National Farmers Union

Arla is the latest milk buyer to drop its milk price – members will see their price drop by 0.75ppl from February 1. This comes on the back of increasing UK and EU milk supplies and a stagnant, if not depressed, global market.

NFU dairy board chairman Rob Harrison said: “With no sign of a market upturn in coming months we will inevitably see a large number of dairy farmers leave the industry. No-one can continue to produce milk at a loss.

“Dairy farmers are rightly questioning why this is happening. We know that global factors have impacted demand, the ruthless retail price war is still at large and milk volumes in the UK and across Europe continue to increase with no sign of slow down. Milk contract terms and pricing schedules are being changed with no negotiation, flouting the voluntary code, farmers are being put on notice and there are rumours of serious undercutting at processor level as milk buyers fight for market share at retail and elsewhere. It is a bloodbath and those suffering the most are our hard working dairy farmers.

“I’d urge every dairy farmer out there to seriously look at his or her own business and question whether it can survive another period of low milk prices. The NFU is meeting with banks regularly but take clear advice – I want you to speak to your own bank, your consultant and your accountant. Producing milk at a loss benefits no-one and we all want a strong, resilient industry here in the UK.

“And milk buyers. We want confirmation that you’re not taking advantage of the current market downturn and doing all you can to add value to every litre of British milk. We’ve recently written to the main UK milk purchasers to assess compliance to the voluntary code – once we have the responses we will clearly see who are treating farmers fairly and who aren’t.

“My message to everyone – retailers, food service and manufacturers - now is the time to show that you support British dairy and want to see a thriving, sustainable industry in the future. We have a number of retail initiatives under review and tenders up for change. Farmers want confirmation that you are serious about the future of UK dairy.

“Altogether the whole dairy supply chain needs to come together to look at ways of managing price volatility as the current situation is not sustainable for anyone.”

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