Further milk price cuts would put dairy farmers under needless pressure, farm minister Jim Paice has warned.
Speaking at the Royal Norfolk Show, Mr Paice said the UK dairy sector couldn’t continue on a downward spiral at a time when the market was looking up elsewhere.
“Clearly the industry would not appreciate a further price cut,” he told Farmers Weekly.
Mr Paice’s comments came amid mounting speculation that major buyers are considering a 1.5ppl reduction in the farmgate milk price timed for 1 August.
Representatives from processor Robert Wiseman Dairies are due to hold talks with suppliers belonging to the Wiseman Milk Partnership board this week.
A Wiseman spokesman confirmed that the company was meeting its farmer suppliers. But he declined to confirm anything – or rule out anything – with regard to prices.
Rumours of further price cuts refuse to go away, however, even though producers are already suffering a 2ppl reduction that came into force earlier this month.
Mr Paice suggested processors were obsessed with bottling milk for supermarkets at a time when the sector should adding value by producing commodities such as butter and cheese.
“We’re still on a downturn, possibly, when the rest of the world is beginning to turn up.
“That has to change, we can’t go on like that.”
Mr Paice declined to comment on suggestions that another price cut would be a last throw of the dice by processors before a code of practice to oversee their relationship with farmers.
“I don’t think it would be right for me to speculate on that,” he said.
“All I can say is that we do know that 50% of our milk consumption is liquid and our processors are still reeling from the fact that cream prices went down for a long while and they aren’t making a lot of money at the moment.
“Whatever the cause is, we have to understand that for the producer – and therefore in the long term interests the consumer – our dairy industry is under a great deal of pressure which they don’t need.”
A voluntary code of practice on milk prices and contracts was still the best way forward, Mr Paice insisted.
The only alternative would be to go to the European dairy package produced by the European Union – which wouldn’t do anything for the current situation, he said.
“It wouldn’t stop prices being cut soon or anything else. It just wouldn’t help. A voluntary code would at least be a better way forward.
“It still wouldn’t stop prices rising and falling. That has to be down to the market.
“What matters is that the processors give the producer a reasonable period of notice and that the produce can extricate themselves from that contract if they so wish at what is also a reasonable period of notice.”