UK dairy giant Robert Wiseman Dairies has announced further cuts to its farm-gate milk price, just one day after the National Farmers’ Union warned that such a move would risk jeopardising farmers’ stability and the long term sustainability of the dairy sector.

Robert Wiseman this morning announced that, from 1st August, it will be cutting the price paid to its suppliers by 1.7 pence per litre. The company blamed the cut on “a collapse in the value of the cream in each litre of farm-gate milk over the last 12 months,” which Dairy Co figures suggest fell by the equivalent of 5ppl.

Following an initial announcement made by Dairy Crest in April, Robert Wiseman was one of a number of large buyers who followed the processor’s example and announced pay cuts of 2ppl for its suppliers in May.  

Yesterday, NFU Dairy Board chair Mansel Raymond said that prospects within the milk market look healthy, both nationally and globally and called on buyers to “work with, rather than against dairy farmers.” Nevertheless, although Wiseman today acknowledged that “markets have improved from the lows of recent weeks” it announced its intention to push ahead with the cuts.

Data released last month by Dairy Co revealed the average UK farm-gate milk price in March stood at 28.64ppl, meaning UK producers currently receive less than the EU average for their milk and rank seventh lowest in the EU15. Although the estimated cost of production remains over 30ppl, Wiseman’s standard litre price from August will be just 24.73ppl.

Farming groups and the European Parliament have expressed fears over the effects rising input costs and unequal power relations between buyers and suppliers in the milk and groceries supply chain will do to farmers’ long term viability and their ability to reinvest in creating a sustainable future. There are fears that prices could drop to lows last seen in early 2010, when the average farm-gate milk price in the UK was 24.19ppl

Pete Nicholson, Milk Procurement Director at Robert Wiseman Dairies said this morning, “We know that this news will come as a major disappointment to Wiseman Milk Group members. We have done everything we can to minimise the reduction in our farm gate milk price but we must now reflect the substantially lower returns from the markets which we serve.”

How farmers will deal with the effects of these price cuts remains to be seen; cumulatively they amount to a price cut in excess of ten per cent, spread out over just a few months.

Speaking yesterday, NFU’s Mansel Raymond prophetically announced, “For too long dairy processors have played fast and loose with farmers’ livelihoods, collectively failing to think long term. Dairy farmers need a sustainable future; further price cuts will jeopardise this and be met with real anger.”

NFU comment on Wiseman cuts

The NFU Dairy Board chair reacted with outrage to news of the cuts, which Mr Raymond called a “catastrophic example of hypocrisy and unfairness.” He said, “Wiseman have blamed the falling cream values that are causing losses in their business as their reason to cut farm gate milk prices; So how can it be right for a processor to just pass this loss onto their farmer suppliers?

“If Wiseman has sold processed liquid milk into the market place at a price that can only cover costs of production, when propped up by record high cream values like those seen in April 2011, then their business strategy is totally unsustainable and farmers will be considering their options going forward.”

Tweet