13/05/2011

The Farmers' Union of Wales' milk and dairy produce committee today gave its full backing to a milk price formula produced by National Farmers Union Scotland which could fundamentally alter the dynamics of the UK milk market. The unanimous backing followed a meeting of the committee at the union's head office near Aberystwyth during which NFU Scotland's chief executive James Withers outlined their proposals.

The formula, which is based on the widely recognised market indicators of Actual Milk Price Equivalent (AMPE) and Milk for Cheese Value Equivalent (MCVE), in a 20% to 80% split - or variations thereof, was identified by a producer working group set by the Scottish union. Supporters of the formula believe it could form the foundation for prices which, while continuing to vary between contracts, nevertheless represent the true value of milk. This would reflect a supply and demand dynamic that UK milk prices have failed to recognise over the last decade.

Speaking after the meeting, FUW dairy committee chairman Eifion Huws said, "The FUW has always welcomed the opportunity to work with other UK farming organisations to further the interests of farming families, and we welcome the work and enthusiasm put into this initiative by NFU Scotland. Committee members scrutinised the proposals at length, and many of the key issues which have faced the dairy industry over the years were discussed."

Mr Huws said the committee fully recognised that the proposal is a starting point for further discussions. However, it was felt that the union should support it as a move towards greater transparency and a means by which to break the cycle of rhetoric and action that has dominated dairy politics for decades.

James Withers said, "If a market-related pricing formula were incorporated as a baseline into producer contracts, it would break the cycle of market failure in the dairy supply chain. Such a move could allow dairy farmers, irrespective of whom they sell their milk to, to move forward with improved confidence and greater certainty. It would also deliver sustainability, which is in the best interest of whole supply chain."

Following the committee's backing for the proposals, the FUW will look at further ways in which the proposal can be developed and promoted. Mr Huws explained the need to act, "With dairy farmers in both Scotland and Wales leaving the industry in droves, something desperately needs to be done. A contract which incorporated this kind of formula could prevent our prices consistently being lower than those on the continent, provide significant transparency, which is what Europe wants, and could put much needed confidence and stability back into the market."