On Tuesday the Environment Food and Rural Affairs Committee discussed ongoing issues in the dairy industry.

image expired

With farmgate prices falling again, the EFRA committee met with farming leaders, including delegates from NFU and the Tenant Farmers Association and David Handley, chair of protest group Farmers for Action (FFA), which has mounted a campaign of blockades against processors, who the group claims are passing on unduly harsh price cuts to farmers.

The Committee also heard from processors' representatives and Christine Tacon, the groceries Code Adjudicator. MPs said the Committee would examine the outlook for dairy farmers and the effectiveness of actions to support the UK industry.

Farmers for Action maintains that the impact of falling milk values is not being felt evenly across the supply chain. FFA chief David Handley said the sector is in dire need of greater transparency, and that unless there is open dialogue between milk buyers and their suppliers, and proof that global movements are affecting domestic prices, farmers will continue to protest.  

Though the NFU does not agree with FFA's argument that that farmers are being forced to bear the brunt of the effects of a global dairy market crisis, the union's dairy board chair Rob Harrison agreed on Tuesday that "Ruthless retail milk discounting is not sustainable, and ultimately will damage the sustainability of the UK industry."

Milk prices have fallen back below the cost of production in the UK, and it is estimated that double the number of farmers have quit the industry compared to 2013. The situation is so serious that George Dunn of the Tenant Farmers' Association went so far as to say, "We are losing family farming."

During the first spate of protests this autumn, FFA targeted processors and retailers that the group felt were 'devaluing' milk in the eyes of consumers, by making the staple a loss-leading item in order to compete in price wars.

NFU's Rob Harrison said the crisis is twin result of increased global production and reduced demand, but asked that the government lobby for measures in Brussels that could "Cushion the impact on farmers".

These include backing the NFU's call for a review of the intervention price for dairy products, supporting a targeted re-opening of Private Storage Aid for cheese, and committing to work on seeking new export markets in Europe and further abroad.

Harrison continued, "We would also like to see the remit of the Groceries Code Adjudicator extended down the supply chain to cover farmers' relationships with processors. We believe this would bring better transparency to the impact of the ongoing liquid milk discounting that we're all seeing in our retailers.

"A number of dairy farmers are within dedicated supply relationships, but using milk as a loss leader puts downward pressure on the whole industry.

"Today another milk buyer announced farm gate milk price cuts for December. We now need Government to do all it can to support a sustainable supply of milk going forward."

Farmers for Action has called two further protests for Wednesday night, in Wiltshire and Cheshire.