Farmers, industry leaders and politicians have criticised First Milk’s sudden decision to delay milk cheques and take more cash from members.
This morning the co-op announced it was postponing payment for milk by two weeks, upping capital contributions from 0.5p/litre to 2p/litre and softening February’s already announced price cut by 1.1p/litre. This is effectively a price cut on all milk supplied between December 2014 and August 2015.
First Milk has said the move was needed to solve a cashflow problem that had worsened with the plunging dairy product prices of the last year.
NFU president Meurig Raymond and NFU Cymru president Stephen James both branded the announcement “wholly unacceptable” when farmers still had high feed bills to pay.
They said the unions were urgently seeking answers from First Milk and would contact all agricultural lenders to make sure they understand the pressure farmers faced.
Their Scottish counterpart Nigel Miller said it showed the extreme lengths the dairy crisis was pushing processors to. But he had been assured it was a cashflow issue that did not reflect First Milk’s trading performance.
First Milk member Robert Sommerville, who milks 190 cows in Dumfries, said the news would put a strain on his business.
“No sooner have I budgeted for one price cut than another comes along.” Robert Sommerville, First Milk member
He said he was already culling slightly more than usual and no longer pushing for extra litres at marginal cost.
“No sooner have I budgeted for one price cut than another comes along.” Mr Sommerville said.
“I am with First Milk as I have previously supported their co-op ethos and have to take some of the positives given in today’s statement.
“They have made a plan to take account of the falling market and this should take us through to August 2015. We can only hope that the market shows signs of improvement by then.”
Another member Alan Simpson, who milks pedigree British Friesians in Leicestershire, said he had always believed First Milk was a safe home for its milk, even if its prices were low in the league table.
“I can survive the two-week deferred payment, but not this low price for a long time,” he said.
Farmer Paul Rymer, from Portskewett, Monmouthshire, said the recent First Milk price cuts meant had no option but to disperse his herd of 150 milkers.
“I’m not going to be treated like this. I would rather go and get a job,” he said.
He said he was furious the co-op has upped the capital contribution.
“I have rang them and told them and even though I’m getting out they’re still going to take it. When am I going to get it back, if ever?”
Farmers also took to Twitter to share their worries.
@charlietaverner I’m a member. Feel the business is so poorly organised at the top. Should have left when we had the chance
— ross henderson (@Rosshen1988) January 8, 2015
@charlietaverner so they’re giving with one hand (late) and taking with the other!
— James Robinson (@JRfromStrickley) January 8, 2015
— Alan Gamble (@Farnell_Simmys) January 8, 2015
South Lakes MP Tim Farron, who has a lot of First Milk farmers in his constituency, said the news put the viability of some farms at risk.
“When First Milk make a decision, they need to realise that farmers cannot just defer bills, direct debits or ignore the demands for payments,” he said.