The NFU has slammed milk processors and supermarkets for failing to pass on the true value of improved dairy commodity markets to farmers.

British farmers had lost out on “millions of pounds” as a result, and the recent farmgate price increases of 0.5-0.75p/litre were an “embarrassment”, NFU chief dairy adviser Hayley Campbell-Gibbons said.

“Prices definitely haven’t gone far enough. If you look at the liquid market, many of the increases don’t kick in until May or June, but cream and other dairy commodity prices have been increasing since last autumn. Farmers are growing tired of waiting for this to be reflected in the price they get for their milk.”

There had been a number of reports in the media that warned retail cheese and butter prices could increase by up to 10% after a wet spring reduced the amount of milk available, but this was not being reflected in farmgate prices, she said.

“There’s something going on here. Either the processors are holding onto this extra money to boost their own profits or the retailers are not prepared to pay a realistic price for British dairy products – instead choosing to sell milk and cheese on ridiculous promotional deals which everyone else has to fund.”

Ms Campbell-Gibbons said spring farmgate price increases should have been nearer to 3p/litre in order to truly reflect the gains in dairy markets.

“I know we’re not dealing exclusively in commodity markets and processors vary in the amount of dairy products sold on spot markets or to retailers, but even so there are four or five factors which favour a sizeable milk price increase this spring.”

She urged farmer representatives to be more vocal with their milk buyers about the shortfall, although acknowledged the current milk contract system failed to give them the bargaining power they needed.

Supermarkets should also be prepared to “put their money where their mouth is” and pay a fair price for their milk if they really want to secure supplies of British dairy products, she said.