21 December 2001

NFU to investigate farm milk price cut

SOUTHERN Co-operative Dairies has run into trouble over its decision to cut farm milk prices from Dec 1.

The company wrote to producers in November, warning them to reduce milk output or face lower prices because it was having difficulty selling surplus milk on depressed spot markets.

The NFU claims it has received numerous calls from angry dairy farmers, and is investigating the 0.7p/litre cut. Producers now receive just 19.01p/litre.

The union believes the reduction may be a breach of the Hants-based companys contract. NFU south east policy adviser William White has sought legal advice and says the companys contract and pricing schedule appears to fix the price to the farmer from October 2001 until March 2002.

Mr White sent a letter to Keith Bassant, SCDs milk supply manager on Dec 12, asking him to reinstate the 19.71p/litre price. "In our view, your pricing schedule only entitles you to make a single actual price announcement for a six-month period. It does not reserve you the right to review the actual price during a six-month period," he wrote.

"There may well be a backdrop of falling commodity prices, but milk prices have only just started to recover and this is a massive kick in the teeth for dairy farmers."

At the start of this week, Mr White was awaiting Mr Bassants reply. "I think farmers deserved a quicker response than this," he told farmers weekly.

Mr Bassant said he wrote to Mr White last Friday (Dec 14), explaining that as long as the company kept above its minimum guaranteed price of 19p/litre, he believed it was within contract terms.

"We are managing to shift our surplus milk, but at a terrible price. The problem hasnt disappeared." Moves by Brussels to raise export refunds might help stimulate demand for that surplus, he added. "It is all good news, but it will have to feed through to spot prices." &#42