Dairy coalition members have renewed their challenge to milk buyers to urgently reverse the spring milk price cuts amid signs of strengthening markets.
In a joint statement signed by coalition members, NFU dairy board chairman Mansel Raymond noted positive signs in the strengthening of global and domestic dairy markets as a result of global supply tightening.
“There are some signs of improvement in the global market that would justify price increases,” he said.
“What’s more, it’s clear from recent media reporting of drought in the USA that farmers’ costs are rising significantly. The prices cuts made in May and June are still hurting; farmers need to see that money back into their businesses now.”
Major milk processing companies, including Robert Wiseman Dairies, Dairy Crest and Arla Foods, cut the prices they paid farmers for their milk in spring by about 2p/litre.
The same companies called off the 1 August price reductions of 1.65 to 2p/litre, which would have seen many farmers paid less for milk than it costs to produce. So far, none of the major milk firms have announced plans to reinstate milk prices to the levels last paid on 1 May.
Nick Holt-Martyn, a principal consultant with The Dairy Group, said: “There is concern about rapidly tightening supply in 2012 which is causing markets in the short term to firm quite sharply. This is due to reduced supply in the northern hemsiphere due to extreme weather in both the USA and Europe.”
Mr Raymond said milk buyers have the opportunity before Livestock 2012 (incorporating the Dairy Event) in Birmingham next week on 4-5 September, to detail how they planned to give farmers the financial oxygen their businesses so desperately needed.
“Looking to the medium term, milk buyers all have the opportunity to identify new ways of doing business with dairy farmers and their customers,” he added.
The dairy coalition is working with all parties to agree the voluntary code, as laid down in the heads of terms during the Royal Welsh Show.
The coalition said long-term relationships, based on transparent and determinable pricing mechanisms, were “vitally important to the future development of the British dairy industry”.
“I firmly believe that dairy farmers also have the opportunity to bring about change in the supply chain,” said Mr Raymond.
“The coalition is calling on farmers to add their contact details to a database, to allow us to discuss and potentially build producer organisations. This will help to give farmers more strength and power to negotiate in what is a very tough and competitive marketplace.”
Information on producer organisations will be available for farmers at the dairy event from coalition members and there will be the opportunity to sign up to a database provided at Livestock 2012.
Dairy coalition members include NFU, NFU Scotland, NFU Cymru, Farmers for Action, the Royal Association of British Dairy Farmers (RABDF), the Women’s Food and Farming Union (WFU) and the Tenant Farmers Association (TFA).