The NFU is poised to launch a national invoicing campaign, inviting dairy farmers to invoice their buyers for the full cost of production, plus exceptional costs arising from this summer’s drought and higher energy prices.
South-east dairy farmers gave their unanimous support to the plan at an NFU open meeting at the South of England Showground, Ardingly last week, and the NFU leadership is hoping for a similar endorsement by Cheshire members next week.
Dairy board chairman Gwyn Jones said that, before launching the campaign in early October, the NFU needs clear evidence of the extra feed and fuel costs dairy farmers have faced this year. Last week it started issuing survey forms to collate the figures.
“We’ve already had some forms back and, while it’s too soon to say what the average cost increase has been this summer, on some of the units we’ve seen, the figures are quite staggering,” Mr Jones told Farmers Weekly.
It was essential that, once the campaign is launched, as many farmers as possible invoiced their buyers. “If only a few do it, then processors will get the impression that the majority are quite happy with their prices.”
Farmers attending the Ardingly meeting were told that the average cost of milk production in the UK at the start of the year stood at 20.34p/litre, while most producers were getting less than 18p/litre from their buyers.
Securing a price increase in the next few weeks was essential to stem the flow of milk producers leaving the industry. “I think retailers are on the point of giving more money to the dairy sector – they just need a push,” said Mr Jones.
Farmers For Action chairman David Handley told dairy farmers at the meeting to take collective responsibility for their future and present a united front. He urged them to issue letters of intent to suspend supplies if their invoices were not paid in full.
Mr Jones doubted the wisdom of threatening to suspend supplies, especially when in many instances it would be the producers’ own co-operatives that would be damaged.
But a comprehensive invoicing campaign would complement the longer term work the NFU was doing to encourage structural change in the processing sector. “There are thousands of pounds that can be saved in this supply chain.”
Dairy UK director general Jim Begg told Farmers Weekly, while he wanted to see more details of how an invoicing campaign would work, he shared the NFU’s concern about the impact of rising costs on the sector.
Copies of the NFU cost survey can be downloaded from www.nfuonline.com/x423.xml
IT’S JUST A STUNT, SAY BUYERS
|Milk buyers have dismissed the NFU’s planned invoicing campaign as a “publicity stunt” which will make little difference.|
“I understand farmers are upset, but this will not make it any more or less likely that prices will change,” said Dairy Crest milk purchasing director Arthur Reeves. “An invoice only carries a legal obligation if it is agreed in advance.”
Peter Walker, director of milk buying for Arla Foods, said he understood why the NFU was looking to raise the issue, but invoicing would be ineffective. “We will continue to pay the price we have agreed in our contract. We do negotiate prices, but with our partnership, not with the NFU.”
Wiseman Dairies procurement director Peter Nicholson said he did not understand the purpose of invoicing, other than as a demonstration that farmers face additional costs.