The GDT was positive with a 1.4% increase in prices at the March 1 trading event for the first time since mid-December. At the event, 21,880MT of products were sold at an average price of $2,253 per MT.
However, in the UK, Müller has dropped its milk purchase price by 1.35ppl from April 1, blaming too much milk and too little demand. Dutch company FrieslandCampina has also reduced its milk prices.
This follows similar announcements from Dairy Crest and First Milk. Also, Arla has given its direct suppliers 12 months’ notice on their contracts.
NFU calls for action
In response to the drop in prices for farmers, the National Farmers’ Union (NFU) called for urgent action.
NFU dairy board chairman Rob Harrison said, “I won’t lie – it’s really difficult out there for many dairy farmers and I honestly don’t see the situation changing in the short-term.
"I honestly don’t see the situation changing in the short-term" NFU dairy board chairman Rob Harrison
“We desperately need help from the government and the EU who must both do more to ensure a sustainable future for the dairy sector and help make tools available for farmers to manage volatility.”
EFRA report issued
This comes as the Environment, Food and Rural Affairs Committee (EFRA) published its report into farmgate prices.
The report, published by a cross-party group of Members of Parliament, acknowledges the threats facing the farming industry.
The EFRA report warns that farmers in the UK are at risk of suffering further cash flow problems if the Rural Payment Agency (RPA) does not commit to fixing ongoing issues with its IT systems.
Neil Parish MP, EFRA committee chair said, "Many producers rely on CAP (common agricultural policy) payments to turn a profit so it is unacceptable that our farmers are still facing lengthy delays to financial support.
“The RPA introduced an IT system that wasn’t fit for purpose and subsequent errors made in the attempt to fix the problem only caused further delays and confusion for applicants.”
NFU president Meurig Raymond agreed that the RPA needed to be fixed.
“This will alleviate the financial turmoil that thousands of farmers have been and still are feeling. And we will be pushing this recommendation in our own discussions with the RPA,” he said.
The committee calls into question the assurance from the retail sector that there is no link between the price at which supermarkets sell to their customers and the price supermarkets pay to farmers.
It stated that while farmers engaged in contractual arrangements with supermarkets, directly or otherwise, are guaranteed a price for their milk for specific periods, the chronic low price of milk sold through supermarkets inevitably disadvantages farmers in the longer term.
The report also said that the Department for Environment, Food & Rural Affairs (Defra) should encourage farmers, processors and retailers to agree more long-term contracts that provide predicable income levels to encourage secure financial planning and investment decisions.
Origin labeling an issue
The EFRA report also investigated origin labelling. It noted that more people were interested in where their food came from, and there was the potential UK consumers could be confused by current practices.
Parish said that while people want to support British agriculture, Defra’s current guidance on labeling allows for companies to sell products such as cheese and butter as British when the raw product is being sourced overseas.
“As a result consumers are given a false impression that they are supporting a home industry when in fact their money is not supporting UK farmers at all,” he said.
He said Defra must strengthen its guidelines around country-of-origin labeling and press for EU support in establishing clearer and better labeling requirements.
Other key recommendations
The report said that there needs to be more effective co-ordination between Defra and the devolved administrations in the UK to prevent unsustainable price inequalities emerging at a national level.
It also noted that farmers must recognize the advantages to being part of a producer organization.
Importance of exports
British farmers and producers must seize opportunities for domestic and global market growth, according to the report.
To be able to trade in a global economy, it says, the agricultural industry needs to look at developing global products or adapting traditional products to meet changing demands.
Dr Judith Bryans, chief executive of Dairy UK, said that the recent Dairy UK export strategy was a good roadmap for the future of dairy exports.
“We welcome the Committee’s recommendation to promote exports with the help of Defra and AHDB (Agriculture and Horticulture Development Board). Just last month, Dairy UK published a new export strategy to drive demand for our quality British products abroad and promote UK dairy globally.
“In order to develop these new export markets, we will need to showcase and promote the quality, the value and the integrity of UK dairy products,” she said.
Report receives praise
Reaction to the report so far has been positive.
Arla farmer owner and board of representative member David Christensen said he thanked the EFRA committee for the intervention during a tough period for dairy farmers, and the recognition of the role of producer organizations.
Dairy UK said that while the dairy industry was taking positive steps forward, government support was still needed.
Bryans said, “The report makes a number of recommendations on exports, adding value and promotion that are very much aligned with Dairy UK’s key priorities in these challenging times for the dairy industry.”
Report needs to be acted on
NFU president Raymond said that the fall in prices and cash-flow issues it caused were the biggest challenges to farmers. He added that the report’s recommendations could help in the short term, and expected to see action.
“It is vital that the industry comes together to deliver these recommendations to support farmers through these difficult times. We want to see genuine improvements, transparency and commitment to give farmers more confidence,” Raymond said.
About the report
As a result of calls for support to farmers, the Committee launched an inquiry in September 2015 to examine the dairy sector, and to investigate measures that could be taken to improve prospects for the agriculture industry.
The Committee also held a one‐off oral evidence session on dairy prices in September 2015, receiving input from industry representatives, processors, retailers, the Groceries Code Adjudicator, and Defra.
The report builds on work undertaken by the predecessor committee, which published an inquiry on dairy prices in January 2015.