Cash from the EU dairy emergency fund should be directed to help small-scale milk producers, the Farmers Union of Wales has said.

The £25m-fund for the whole of the UK was announced in January as part of an EU-wide rescue package for the dairy industry.

Of that, £3m is destined for Wales and the Welsh Assembly Government has held a consultation on how best to spend the money.

The FUW response said it believed the money should be distributed by paying 0.5p/litre on the first 100,000l of production plus an estimated payment of 0.15p/litre on production over 100,000l.

“This would target smaller businesses which, on average, have a lower profitability per litre,” said the FUW’s milk and dairy produce committee chairman, Eifion Huws.

The other option would be a payment per litre for milk produced between October 2008 and September 2009.

Mr Huws said members acknowledged that all dairy producers had suffered as a result of low farmgate prices but believed smaller scale producers had higher production costs per litre and therefore the fund should be weighted in their favour.

“We are hardly talking about large sums of money here but the fund will, nevertheless, provide some relief for struggling dairy producers, and the union is firmly in favour of directing support where it is most needed,” said Mr Huws.

The Welsh Assembly Government will announce a decision soon on how the fund will be shared out.