Milk prices debate keeps dairy in the spotlight

By Chris Mercer

- Last updated on GMT

Related tags Supermarket Milk

Public debates over farmgate milk prices will take place across
Britain over the next couple of weeks, as producers and campaign
groups look to maintain pressure on retailers and processors.

The Great Milk Debate was launched today by the National Federation of Women's Institutes (WI), in the latest part of the group's campaign to raise farmgate milk prices.

Prices paid to farmers have rarely been out of the public spotlight since the start of the year, amid an investigation by competition authorities, petitions, stark figures and calls for a new watchdog to regulate the grocery supply chain.

Nearly 100 debates, organised by WI, are set to take place across the UK before 4 May.

Peter Kendall, president of the National Farmers' Union, told a WI-hosted launch event on Tuesday that consumers held the key to helping farmers.

"We need you, but you also need us, to produce the quality assured, high welfare British food that you rightly expect to be able to buy."

Kendall again welcomed a recent initiative by Tesco, Britain's largest supermarket, to pay 850 milk producers 22 pence per litre (ppl) via direct contracts.

The average farmgate price is currently around 18ppl, below the cost of production for many.

But he said this was only a start, and highlighted a recent Milk Development Council report showing: "a further 16 per cent of dairy farmers are planning to quit and that we stand to lose 900 million litres of production; 128,000 dairy cows; over 2,000 milk producers; and £170 million of output."

Industry figures show retailers, meanwhile, have increased profits on liquid milk by a quarter in the last 10 years and more rapidly since 2003.

Negotiations between farming groups, processors and retailers have sought to secure price rises across the board over the last few months.

Some producer groups and other campaigners have called for a new supply chain watchdog in the UK, which could be set up once the Competition Commission has completed its current probe into the country's grocery chain.

But, many dairy industry leaders are not in favour, despite the problems producers face, fearing a return to a managed milk industry that would lack the necessary flexibility to seize market opportunities.

"The industry- from retailer to processor- has shown that it responds both to market signals and to consumer demand and these are by far the most efficient "regulator" the industry could face," David Curry, chairman of industry association Dairy UK, told the WI conference.

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