Swingeing milk price cuts have sparked warnings of a disastrous decline in the industry unless the whole supply chain works more closely together.

Cuts of 0.9p/litre by Robert Wiseman and 0.75p/litre by Dairy Crest have knocked 100s of millions of pounds off producers’ incomes.

The cuts prompted NFU milk board chairman Gwyn Jones to call for a fundamental review of the whole chain during the cross-industry Dairy Supply Chain Forum on Tuesday, 19 July.

“Dairy farming is on the edge of a precipice.

What is needed is a fundamental review of what society, the consumer and the government wants from its industry,” Mr Jones told Farmers Weekly.

“Three dairy farmers a day are quitting.

We could lose 40-50% of milk producers and we will see fewer but bigger and bigger units.

“And, rightly or wrongly, the public perception is that the bigger units are more intensive and we get the phrase ‘factory farming’ creeping back in, which does our image no good at all,” he said.

“Is this what the government will tell consumers it has achieved on their behalf,” he added.

“To be bottom of the EU price league is wrong and shows how powerless we are.

We need a new strategy.”

He proposed six key action points.

  • Long-term engagement with milk processors and the farmers who supply them and an end to regular, damaging tendering exercises that take value out of the industry.
  • The entire milk supply chain needs to recognise the importance of adding rather than subtracting value at every stage.
  • Customers should be encouraged to put British first. It is wrong that farmers are forced to comply with strict standards only for companies to import dairy products produced to inferior standards.
  • The issue of raw milk supply contracts needs to be addressed urgently so that processors cannot use producers’ money to buy shelf space with the impunity that they do at present.
  • The need for further rationalisation of the manufacturing sector is more evident than ever in order to promote much greater competitiveness through the dairy supply chain.
  • Farmers need to take greater control of their own destiny in the industry by driving that rationalisation process forward through farmer controlled businesses.

jonathan.riley@rbi.co.uk

Air your views and suggest further points of action for government and milk buyers at fwi.co.uk/talkingpoint