Dairy board chairman Gwyn Jones said: “It can only be described as a huge mistake at Dairy Crest for them to have to announce a price cut, and one of such magnitude, at a time when milk prices elsewhere are still rising.
“It shows an embarrassing lack of strategy within the company for which unfortunate farmers will have to deal with the consequences. Dairy Crest was warned earlier in the year that their recruitment of organic suppliers was too optimistic given the uncertain market, but they forged ahead with a huge lack of apparent foresight.”
But, Dairy Crest milk purchasing director, Arthur Reeves said the “balancing charge” was one measure by the company to reduce the oversupply of organic milk by getting farmers to convert back to conventional production.
“Organic milk supply remains pretty buoyant, but demand has fallen, largely due to the ongoing credit crunch.” Sales were unlikely to pick up considerably in the near future, so measures had to be introduced to balance supply and demand, he said.
“We’ve introduced a premium over the standard price for conventional milk; are offering Davidstow cheese contracts to those in the right area and are also working with the Soil Association and OFG (Organic Farmers and Growers) to see if we can get a derogation for a temporary conversion from organic to conventional.
“If we can get some of these measures to work, we won’t need the full 4p/litre cut.”