02/03/2011image expired

NFU President Peter Kendall yesterday (1st March) urged retailers to take greater responsibility for their actions and those of their immediate suppliers.

Speaking at the South-East Agri Expo in Kent, he claimed that processors had laid responsibility for securing a fair price for farmers on the NFU and that rising oil prices were set to wreak havoc on the dairy industry unless retailers adopt a more cooperative attitude. Kendall said, “I’ve had processors on the phone this week telling me that we have to push their customers for price increases. The inference is clear - unless the NFU pushes for an increase to the cost price that processors receive from their retail customers, they’ll have no option but to pass those cost increases in the form of lower prices back to farmer suppliers who can add them to the increases that they are already experiencing in fuel and fertiliser bills.”

Kendall called for retailers and processors take responsibility for the impacts that their buyers’ commercial decisions have on the supply chain, saying, “The market is failing and farmers and growers are paying the price. While publicly listed companies pull rabbits out of hats – keeping prices low for consumers but still posting good returns for investors, behind the scenes their supply base is being starved. It’s a supply chain devoid of innovation and investment and a poorer place for consumers – exactly what the Competition Commission warned us about in its final report into the grocery market nearly two years ago."

Arla announces £34 million increase in profits

Kendall’s remarks come in the same week as dairy giant Arla announced vastly increased annual profits. The co-operative, owned by Swedish and Danish farmers, which is among Britain’s top three milk processors, revealed turnover in 2010 was up £32.135million at £5.627billion, with profits of £145.53million; an increase of around £34 million.

Chief executive Frederik Lotz said: “Over the past year, Arla has shaken off the effects of the recession without letting go of its tight cost controls. We’ve committed to a number of investments that demonstrate the company’s focus in the long-term and our readiness to exploit the opportunities offered by the markets in which we operate.”

Mr Lotz said the firm’s plans to build a £150million dairy at Aylesbury, near London, show its commitment. The facility is expected to be the world’s largest fresh milk processing site once completed.

Ciolos reforms aimed at empowering producers

Attempts are being made to increase farmers’ power in the marketplace. European Agriculture Commissioner Dacian Ciolos has today clarified several aspects of his proposed dairy reforms, which were published in December and aim to empower farmers.

Mr Ciolos has said farmers will be able to demand contracts with supply specifications from the processors and that there will be no exclusivity with the contracts; allowing farmers to sell their milk to different processors if they so wish.

Ciolos was responding to queries by MEPs Jill Evans and Alyn Smith. Mr. Smith welcomed the clarification, showing support for the commissioner’s attempts to address the chronic imbalances in the milk market. Smith explained that the commissioner’s response “Could not be clearer and [it] puts my mind at ease that the eventual legislative proposal will do much to tackle the shameful imbalances that have existed for too long in this sector.”