Farmers challenge milk processors to pay more

The organisation representing Dairy Crest‘s 1350 suppliers has called for an immediate increase in milk prices to help farmers meet spiralling costs.

Dairy Crest Direct wants a minimum price of 27p/litre as soon as possible, and has urged the milk processor to highlight the need for a more sustainable milk price with its customers across all sectors.

“With costs of production in excess of 27p/litre and increasing, the ratio between milk price and feed costs is at the lowest point since the summer of 2007,” DCD chairman David Herdman said. “The need for a significant step change in milk price is long overdue.”

Milk prices on non-aligned contracts were particularly unsustainable at 24.6p/litre and were below equivalent European, US and New Zealand prices, he said. “With DairyCo reporting that 2010 saw record annual average results for its commodity market indicators, the fact that non-aligned UK dairy farmers continue to receive milk prices at a discount to these confirms the UK dairy supply chain is failing its key resource – its dairy farmers,” said Mr Herdman.

Dairy Crest milk procurement director Mark Taylor recognised the cost of production was increasing and said the company was talking to its key customers, but he would not be drawn on whether prices would rise.

“DCD is right to highlight the issue and we’re trying to work with our customers in what is still a very competitive environment. We want a sustainable supply of British milk and are keen to address anything that could threaten that,” he said.

Non-aligned contracts accounted for around 30% of the overall business, and that level was decreasing as more dedicated supply pools were developed, he added.

NFU dairy board chairman Mansel Raymond welcomed DCD’s challenge for sending a clear message that farmers were dissatisfied.

“I look forward to seeing other farmer representatives follow DCD’s lead in challenging milk buyers on behalf of the suppliers they represent. Let’s have a collective New Year’s message to milk buyers – farm gate milk prices should be going up,” he said.