Overproduction undermining price-war

- Last updated on GMT

Related tags: Milk, Dairy farming, Dairy

Farmers in the UK have again been urged to cut the level of milk
production by the milk year-end in March or face a 'super-levy'
from the European Union.

This time the warning has been issued by First milk, the 4,000 strong farmer owned co-operative, and the Farmers For Action group (FFA). Both organisations played a role last year in securing an increase​ in milk prices from Dairy Crest.

With around 100 days left in the milk year commentators fear that it is likely that UK milk production will reach levels that are higher than those set by the European Union.

The groups claim that milk overproduction may lead a drop in the price that farmers are currently receiving for their produce.

In December last year a similar conclusion was drawn by the US Department of Agriculture (USDA), and in the UK by the Dairy Industry Association. They suggested that farmers should decrease milk production slowly over the next few months and avoid a dramatic fall in production during February in an effort to make sure the quota is not reached.

A USDA report indicated that milk receipts were declining at the end of last year, but many fear that farmers may produce over their quota limits. The association says that farmers may have to resort to culling in order for this to be achieved.

At present, figures from the Rural Payments Agency indicate that production in October 2003 was 3.6 per cent higher than October 2002, and the November production was 4.4 per cent higher. The figures revealed that the first eight months of the milk year saw a cumulative increase of 251 million litres or 2.7 per cent compared to the same period in 2002.

First Milk claims that if farmers continue with the same level of production through February and rely on a dramatic fall in March the returns that farmers receive will be undermined.

To avoid this scenario First Milk has asked all members to review their anticipated production levels to the end of March against the available quota and to action sooner rather than later.

The FFA say that many farmers have left the industry due to the disapproval of the recent CAP reforms. The group urges those who remain in the industry to be wise and not jeopardize past efforts to secure milk prices. Both FFA and First Milk wish to increase the price farmers receive for liquid milk this year.

Related topics: Markets, Pricing Pressures

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