Dairy processors deny selling milk too cheaply

Dairy processors have denied they are under utilizing their skimmed milk powder drying capacity and are still selling milk too cheaply.

Farmers and others in the industry are starting to question why the Westbury SMP plant, which is run jointly by co-ops First Milk, Dairy Farmers of Britain and Milk Link, is not operating flat out to take advantage of rising SMP prices.

 “In the current market place, Westbury should be working 24 hours a day”

John Allen, Kite Consultanting

According to Milk Development Council figures, SMP is now worth  £2300/t, £900/t more than 12 months ago.

Not enough milk

John Allen of Kite Consulting said: “In the current market place Westbury should be working 24 hours a day.”

Co-ops contacted by Farmers Weekly confirmed Westbury was not at full capacity, but said the drop in milk output meant there wasn’t enough milk available and switching milk from other contracts was not always an option.

Arthur Reeves at Dairy Crest said the milk drier at its Severnside plant was also not running at capacity for the same reasons.

Buoyant commodity prices

The co-ops and other processors all denied that they were failing to take advantage of buoyant commodity prices to press for higher prices from middle-ground customers.

A Dairy Farmer of Britain spokesman said the business was walking away from those who refused to pay enough.

“There will be more price increases for farmers as the year goes on.”

Arthur Reeves, Dairy Crest 

Mr Allen acknowledged contracts should not be broken but said there was no reason dairy firms should be competing to sell to middle-ground customers who had shown no loyalty to the industry in the past.

‘More increases’

The recent surge in SMP prices had caught sellers slightly off guard, said Mr Reeves, but he said the rise and shortage of milk meant the middle ground would have to start paying an appropriate price for milk.

“There will be more price increases for farmers as the year goes on.”

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