Dairy farmers are preparing to launch direct action against milk processing plants and supermarkets amid growing anger about falling prices.
In the past seven days, all of the top four UK dairy companies announced heavy price cuts, which took prices below the cost of production for many diary farmers.
Processors have blamed a global slump in commodity prices for the cuts, which have seen farmgate prices fall as low as 27p/litre for some producers.
But the FFA said more than 85% of milk produced in the UK is used in the UK, so the heavy price cuts cannot be justified, especially when costs of production were more than 30p/litre.
Paul Rowbottom, FFA co-ordinator for Derbyshire and Staffordshire, said many farmers were now in a worse situation than two years ago during the SOS Dairy campaign, which saw blockades outside milk depots.
“This is worse than two years ago because the majority of farmers have borrowed and invested a lot of money,” he said.
“A lot of the figures have been based on a 29-30p/litre bare minimum. The dairies all know that people have borrowed money and invested in their businesses.
“I spoke to one guy last week who had a £5,000 feed bill to pay. If you’ve got a bill coming in and outstanding finances, people are just trying to produce more milk even though they are not making any money to try to pay the bills.”
Mr Rowbottom said FFA had contacted all the main processors last week and urged them to put the prices back up. But at the same time, farmers “had to be sensible” about the amount of milk they produce.
“You have got to produce what your processor can actually sell,” he added.
The FFA unveiled a milk pricing formula last week that would offer a guaranteed price for an agreed volume of milk and an open market price for any extra.
However, Mr Rowbottom said the latest round of heavy prices cuts were “not justified”, as up to 90% of the milk produced in the UK is used here, so farmers should be offered greater protection from global price slumps.
Muller Wiseman, the main milk buyer in the North and North East, slashed its milk price by 1.9p/litre to 27.1p/litre from 1 November.
“It puts you out of business,” said Mr Rowbottom. “It’s unviable. You’re going nowhere fast.”
The FFA has invited dairy farmers who were prepared to protest against falling prices to meet at Market Drayton Livestock Market at 8pm tonight (Monday).
Mr Rowbottom said: “We will be going to the market to see how many people turn up.
“If we get lots of people, we will be going down the road to Muller. We shall be talking to them and other dairies tonight as well.
“If Muller comes out and talks to us, we will be gone as quickly as we arrived. We don’t want to blockade, but if they don’t listen to the damage they are causing the industry, what other action can we take?”
Muller Wiseman blamed its latest reduction on significantly lower returns from its sales of cream, butter and surplus milk.
Ronald Kers, chief executive at Müller UK & Ireland Group, branded FFA as “militants” and warned that direct action could be “disastrous” for the dairy industry.
He said: “This group of militants believes that markets can be affected by unlawfully halting operations and vehicle movements in and out of dairies, which adds substantial cost and makes it harder for processors to recover from the impact of this slump.
“The taxpaying public, which includes hard-working farmers, will be left to pick up a substantial bill for the policing of these illegal blockades and hundreds of dairy employees who simply want to do their jobs before going home to their families will again be affected.”
Mr Kers pointed out that UK farms had increased production by more than 1bn litres of milk this year – almost an extra litre for every 10 litres they produced last year.
“Unfortunately this extra milk, coupled with weaker demand, have affected farmgate milk prices,” he said.
Meanwhile, former Defra secretary Owen Paterson said blockading the Muller dairy factory in Market Drayton would be a “stupid thing to do”.
He said: “Blockading will achieve absolutely nothing. It is a stupid thing to do and won’t achieve anything – it will just put off big investors or money and business.”
Mr Paterson, the Conservative MP for North Shropshire, noted that there was still a large contrast in milk production costs among farmers.
He said: “It is obviously tough for those who can’t produce milk at this price.
“As a country we still have a dairy deficit and instead of blockading, we have to work with the government.
“We have to make sure that the money spent in hospitals, schools, prisons and other services is going into British farmers and producers.
“If every hospital bought dairy from here, it would make a real difference.”
Mr Paterson has previously called for such bodies to buy locally, as imported foods make up about one-quarter of all food consumed in Britain each year.
A word from Morrisons
Morrisons sent Farmers Weekly this statement in response to a recent article about milk prices:
I was concerned to read in the piece Farmers divided on how to tackle milk price crash the statement that supermarkets like Morrisons are doing little to support dairy farmers and should “up their game”.
Morrisons have real sympathy for dairy farmers suffering from price cuts prompted by unparalleled movements in global dairy commodity prices. Suggestions that our milk supply tender is a response to the current market situation, however, are entirely untrue – we can confirm that our current five-year milk contracts continue early into next year.
We have always agreed that new mechanisms to help the industry cope with volatile price movements must be developed and we are committed to developing them with our processors.
We started on this in 2013 through a transparent pricing model for farmers in a First Milk cheese contract which removes some price volatility. We’d like to extend these principles into future liquid milk supply contracts.
We want the UK to retain a strong and competitive dairy industry because we continue to sell 100% British milk and cream as we always have. Eighty percent of the cheese we sell is also British – a higher proportion we believe than any other retailer.
In addition, as part of our commitment to British beef, we offer a number of benefits to our milk suppliers. These include our dairy bull calf scheme which processes more than 25,000 dairy bull calves a year, an extra source of income for dairy farmers.
As in every other agricultural market, the best way to tackle milk price volatility is through working together.
Group corporate services director, Morrisons