UK milk producers push for better deal, as colleagues quit

By Chris Mercer

- Last updated on GMT

Related tags Dairy Uk dairy farmers Dairy crest Milk

Talks to get UK dairy farmers a better deal with supermarkets are
expected to intensify over the next couple of weeks, as new figures
show nearly 1,000 producers have quit the sector in the last year.

Producer associations are pushing retailers and dairy processors hard in the run-up to Christmas, to close what they say is a four pence gap in some cases between the average farmgate milk price and cost of production.

The talks highlight how intense cost pressures continue to bite across many areas of the UK dairy industry.

Protests loom in the New Year if a deal cannot be made, but it is understood the National Farmers' Union (NFU), the largest dairy producer union, has refused to support any strike action.

Some believe such direct action would be lucky to get more than 10 per cent of UK dairy farmers participating.

Andrew Hemming, vice-president of Farmers For Action, a more activist producer association, said: "We're desperately trying to get something sorted with the supermarkets. They're beginning to understand that our production costs have gone up."

He spoke to​ after the Milk Development Council revealed there were nearly 1,000 fewer dairy farmers in Britain now, compared to November 2005.

Perhaps more worrying for the industry is not that numbers are down, which was expected as part of a consolidation trend, but that greater numbers of large and more efficient businesses have disappeared than was anticipated.

The UK already has the lowest farmgate milk prices in Western Europe.

Large suppliers to Dairy Crest, Britain's largest dairy firm, were 0.5p per litre (ppl) short of breaking even in a recent study by supplier association Dairy Crest Direct. The gap was 1.5ppl on average for most farmers, the NFU said recently.

Dairy firms have repeatedly denied putting farmers under unnecessary strain, warning that cuts to farmgate prices reflected cost pressures they also faced.

A petition containing around 52,000 signatures is set to be sent to the UK government at the end of January, complaining at the unfair treatment of farmers and calling for an independent watchdog to regulate milk prices.

Producers remain divided on the latter. Arguments broke out at a conference earlier this year after leaders of the NFU and industry association, Dairy UK, rejected the idea of a milk price watchdog. Producers must play the market instead, they said.

Still, the NFU will this week launch a new campaign on 'why British farming matters', amid concerns the government has left the sector to rot for too long.

UK agriculture and horticulture added £5bn to the British economy last year, the NFU said.

Public opinion appears to be moving farmers' way. More than half of people asked in a recent ICM poll said they would prefer to buy local dairy products rather than imported brands.

Putting those good intentions into action can be a little more difficult, however. "There's still quite a large percentage of people who will do a one-stop shop and buy whatever the supermarkets put in front of them,"​ said Andrew Hemming.

Signs of greater effort from both supermarkets and dairy firms to improve earnings for producers have emerged in recent weeks.

Sainsbury's has said it will work directly with 450 farmers, linked to processing firms Robert Wiseman and Dairy Crest, in a new Dairy Development Group; something that could provide better foundations for producers to invest for the longer term.

And, Dairy Crest raised prices by 0.2ppl in October. The moves added weight to predictions that 2007 would bring more stability and even relative improvement to UK milk producers, put forward by a Milk Development Council supply chain report.

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