Dairy giant Muller has announced plans to cut the price paid to its milk suppliers. The announcement has caused an outcry among farmers, as EU statistics show UK suppliers currently receive 4 pence per litre below the EU average. As of November last year, the UK was seventh from bottom of the EU milk price league table.

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The processor announced last week that it would cut the price paid to its 150 suppliers by 0.5 ppl from February.

A spokesperson for Muller, which is currently planning an extension of its Shropshire plant at Market Drayton that the company claims will create 300 jobs, said the decision to cut prices paid to farmers was unavoidable and had been made due to current trading conditions and rising raw materials costs.

However, Shrewsbury MP Daniel Kawczynski said that, given the current economic climate, rising feed and fuel costs and profitability of the dairy sector, farmers need a pay cut “like a hole in the head.” The MP has written to Muller Dairy's director to argue the farmers' case.

Mr Kawczynski said, “I do appreciate we are in difficult economic times, but dairy farmers are facing a difficult future with increasing costs and this reduction in milk prices could threaten the very existence of some of these farmers.”

Farming industry commentators have pointed out that the cuts come at a time when the demand for milk is up and farmers elsewhere are benefiting from increases in pay. Speaking in November, NFU Dairy Board chair Mansell Raymond urged the government to speed up the implementation of an ombudsperson to uphold the grocery supply chain code of practice. He said, “Prices remain below the value of milk according to key UK market indicators for Milk for Cheese Equivalent and Actual Milk Price Equivalent.”

Dealing as they are with the pressures of rising input costs, farmers can ill afford to bear the brunt of corporations cutting costs down the supply chain to preserve their profits. Speaking at the Oxford Farming Conference last week, organic dairy farmer and scholar Terry Hehir outlined the the invidious position in which farmers trapped in bondage to large companies find themselves. Mr Hehir recommended that farmers organise cooperatively to protect their interests.

He stated, “Farmer cooperatives are the only logical structure to address the power imbalance [in] agriculture”

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