** IMPORT ** Spiralling costs boost case for milk price rise

JOURNAL : Farmers Weekly
SUBJECT : NFU dairy
AUTHOR : Philip Clarke
SECTION : News
ISSUE DATE : 13/09/06
PAGE NUMBER : 10
COPYRIGHT : Free reuse

HEADLINE: Spiralling costs boost case for milk price rise

TEXT: The gap between the price dairy farmers receive and the costs they face continue to widen, providing further evidence that the market just isn’t functioning, dairy board chairman Gwyn Jones told the NFU council.
Presenting the findings of the NFU’s survey into the impact of this summer’s drought and the hike in fuel prices, Mr Jones said that, on average, dairy farmers had seen their costs increase by 0.8p/litre.
This included the fact that 96% had been obliged to buy in supplementary feed and 62% had also faced a drop in milk yields. The cost of providing energy and water had gone up 0.13p/litre alone.
This took the average cost of milk production to over 21p/litre, compared with an average price received by the farmers taking part in the survey of just over 17p/litre. “This market just isn’t working.”
Mr Jones said the NFU would be pressing ahead with its invoicing campaign. It would be circulating sample invoices to its members and inviting them to return them to the NFU. While there was little chance of dairies actually paying up, it was a way for dairy farmers to register their dissatisfaction and for the NFU to raise awareness of the crisis. “If all farmers back the campaign, I’m confident we will get a price increase,” he said.
Longer term, there was a need to revise the contracts. These left producers in a very weak position, vulnerable to retrospective cuts in prices. “No one signs these sorts of contracts in any other walk of life,” said Mr Jones.
The NFU was planning to create its own industry standard milk contract to try and redress the balance.