Margins taken by retailers at the top end must be readdressed if they are to keep supply from primary producers.
That was the message from RABDF chairman David Cotton, who said it was part of the problem why the marketplace was not working.
“While it might be in the consumer’s interest to keep retail prices down, some slack has to be taken out of the top end’s margin. However, I do believe the message is finally getting across that farmers are simply not getting enough money for their milk.”
Currency and inefficiencies were two other issues contributing to an ineffective marketplace. But while currency is outside of the industry’s control, Mr Cotton said it was yielding opportunities in the export market.
“The UK is still at the bottom of the European league table with the average EU27 milk price for June at 30.83ppl, while the UK average was 26.61ppl. And whichever way you look at it, this is frightening and the recently announced price rise only goes a little way to resolving the issue,” said Mr Cotton.
Mr Cotton said consolidation among milk buyers and processors would continue to be vital and welcomed the various attempts by NFUS who were trying to create workable solutions to creating a sustainable industry.
However, he stressed farmers needed to get over getting hung up on dedicated liquid retailer contracts.
“These account for less than 20% of producers. We get hung up about offers made by Waitose and M&S when in fact those multiples are not in the driving seat. We also keep focussing on the liquid market which accommodates 50% of total production. Our real concern should be the other 50% of liquid milk supply used for processing.”
However, a sustainable industry isn’t just about the industry working together better, farmers have to take an element of risk, he added. “Unfortunately it appears very few within the industry are prepared to take risk, particularly in a mature market place. If you want to grow your business you have to take some risks.”
For more from the Dairy Event and Livestock Show see FWi's dedicated report page.
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