Dairy company First Milk faces renewed calls for clarity following speculation that the company could be forced to cut its farmgate milk price.
It comes after the farmer-owned co-operative warned that the sector was coming to a crunch point, conceding that a cut in the milk price was on the “spectrum of possibility”.
First Milk is said to be considering a price cut in the region of 1.5-2p/litre for dairy farmers on its cheese contract.
But the fear is that such a move would push other milk buyers to cut their prices too – forcing the market down and causing a drop in farm incomes.
David Handley, chairman of Farmers For Action, called on First Milk to “come clean” and explain to milk producers exactly what was going on.
“Talking to other cheese manufacturers around the country, yes, they say things are difficult, but they are certainly not suggesting anything surrounding a price cut.”
Last week, First Milk warned that the cheddar cheese market was “a problem right now” with large volumes of low-price cheddar imported from Ireland.
But Mr Handley said he saw no evidence for such a scenario.
“I’m sorry – it just doesn’t stack up,” he said.
The uncertainty surrounding the situation has already had an impact on the prospects for other dairy farmers hoping for a rise in farmgate milk prices.
Jonathan Ovens, chairman of the Arla Foods Milk Partnership (AFMP), said the speculation had scuppered talks that almost secured a “substantial” price rise for Arla’s dairy farmers.
“It is hampering our position in the marketplace when it comes to recovering extra money for our farmers while there is an element of doubt about where farmgate milk prices are going.”
There were no signals coming out of the market that a farmgate price cut was necessary, Mr Ovens told an NFU dairy summit meeting on Thursday (12 April).
First Milk communications director Paul Flanagan told Farmers Weekly the company was keen to avoid a repeat of the situation last year where price cuts took producers by surprise.
“We have been speaking to customers for quite a while and we continue those conversations. We will see where we are when we conclude those conversations.”
Mr Flanagan added: “From our point of view, we have been open about [the direction] we believe cheese returns need to go and we’ve said we’re in dialogue with customers.
“If people are critical about that process and the way we’ve done it, then it is up to them. But we feel we have followed a path which is open and transparent with our farmers.”