Farmers to pay for milk price cuts?

By FWi staff

MILK payments could come under renewed pressure in the new year, industry analysts have warned.

Dairies will look to recover some of the 60 million lost through price cuts to secure liquid supply contracts, analyst Barry Wilson told the Milk Development Councils regional meeting at Harper Adams University College, Shropshire, this week.

Despite agreement that supermarket contracts add little to suppliers margins, the four major liquid dairies had been utterly ruthless to maintain market share, he said.

“Express calculates that from April 2001 to April 2002, price cutting by dairies – not supermarkets – will have driven 60m out of the liquid market; equivalent to 2ppl.

“Someone will have to pay for it and it may well be the producer,” he added.

Defra figures suggest the average producer price will be about 19.2ppl this year against 16.9p in 2000; a rise of 14%.

But Mr Wilson said producers must realistically expect just 16-17ppl in future as world markets are freed up.

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