The NFU has challenged claims by milk processers that falling cream prices are to blame for reductions in farmgate milk prices.
Robert Wiseman Dairies announced on Monday (30 April) that it was reducing its milk price by 2p/litre to 26.42p for a standard litre from 1 June 2012. It follows a 2p/litre price cut by Dairy Crest last week.
Wiseman said the move reflected the “continuing and sustained impact of a challenging market environment and more recently a collapse in the value of bulk cream”.
But NFU dairy board chairman Mansel Raymond said: “Again the bulk cream market has been cited as the reason for the cut. Yet it’s clear that the price that liquid milk is sold for is the main contributing factor, and that is unsustainable.
“The NFU is extremely dismayed at news of another processor price cut. Wiseman’s move to slash two pence off a litre comes at a time when farmers cost of production is in excess of 30p/litre. This is another devastating blow to the farming businesses affected.”
The NFU is arguing that milk processers should be seeking to get more sustainable returns from selling into liquid markets.
Rob Newbery, NFU chief dairy adviser, said the price of liquid milk had been deflated over recent years in an environment where all other food products were going through inflation.
According to DairyCo Datum figures in 2008, the retail price of a four-pint polybottle of milk was £1.53, yet in April 2012 this had fallen to £1.18.
Mr Newbery said price cuts from both Dairy Crest and Wiseman were a serious knock to the confidence of dairy farmers.
“The psycological effect is really serious. There will be some farmers who will be thinking that we can’t trust the markets we are operating in.”