Sieta van Keimpema, vide president of the European Milk Board (EMB), told DairyReporter.com that farmers and processors were being short changed by major supermarket groups that continue to profit at the same time suppliers struggle to cover costs.
Earlier in the week, UK-based supermarket group Sainsbury's announced it was extending cooperation with national dairy manufacturers and cooperatives like Dairy Crest and Wiseman’s to source own label cheese, milk and cream from British suppliers.
The retailer, which owns hundred of supermarkets across the country, said that the extension reflected plans for further investment into the UK supply chain.
While the move was cautiously welcomed by the National Farmers’ Union (NFU), the EMB says that it remains disappointed with retailers across the bloc failing to ensure farmers can meet their own costs.
Van Keimpema claims that despite major retailers professing concern for protecting supply across the industry, all supermarket chains were refusing to support a ‘fair-trade’ style of milk and dairy pricing.
“We are going through a very hard crisis in the dairy sector, our milk prices have fallen back 50 per cent since December 2007,” she stated. “Our costs however, have not fallen. What we also see, is that the profits of the retailer have risen in the same period.”
At the same time, the EMB said it believed that retailers continued to demand that suppliers meet specific production techniques, while importing cheaper goods not meeting these standards.
“We call that ‘a stage performance’,” stated van Keimpema. “Consumers think that the retailer is a concerned and justified partner, but that is not a realistic view.”
Under its calls for a new means of pricing, the EMB hopes to push for a system where the cost price of milk production should be calculated up front. The lobby group says the move would allow farmers to better negotiate minimal prices for their products.
“After this, the processor can put his costs on top of this price and that is the milk price,” stated van Keimpema. “Now we deliver the milk to the processors and have to wait and see what the price is going to be.”
The EMB said that under the current system, suppliers were not an equal partner in the chain.
Despite the group’s criticisms, the EMB conceded that following strikes by dairy producers last year, Germany’s more discount-focused retailers had worked in favour of supporting farmers with a revised milk price.
However, the lobby group claimed that the deals agreed with the retail sector over set pricing were soon bought to an end.
In outlining Sainsbury’s own plans for securing dairy supply, Justin King, chief executive for the group, said that although it will continue to invest in its dairy farmers, it did not believe a contractual price would benefit the industry in the long-term.