Following the union’s council meeting on Tuesday the NFU has demanded milk buyers work with, rather than against dairy farmers, who have suffered drastic cuts in recent months. The union’s involvement follows rumours of further price cuts for liquid milk suppliers.

NFU dairy board chair Mansel Raymond said that globally demand for milk is rising and domestic commodity markets are looking healthy. However, milk processors and retailers disagree and described markets as “challenging” following cuts of nearly ten per cent announced in April and May. Some major retailers have been engaged in a price war over a number of grocery items, including own brand milk during the first half of the year.

Mr Raymond said any such cuts would be hugely irresponsible given the current pressures on farmers. He called on processors to build up long term investment in the supply chain and on farmers to better organise to secure more equal bargaining positions within the chain.

The price of production for milk in the UK is currently over 30 pence per litre, though average farm gate price is around 27ppl. The NFU dairy chair said, “Based on feed, fuel and fertiliser cost, we estimate that average farm cost of production have risen by 0.3ppl in the last 3 months.”

He continued, “Milk buyers in the liquid sector operate distinct businesses’ with distinct markets and costs. If rumours of a wave of cuts in the liquid sector are to be believed, farmers will reasonably be asking some serious questions about the process by which some milk buyers make pricing decisions. There is another way – where milk buyer and producer work together and understand each other’s needs; specifically the farmer’s need to make reasonable living and invest in the future of their business.”

Across Europe, farming organisations have urged farmers to organise collectively to improve their bargaining position. In France moves to form collectives and improve representation are underway ahead of the dissolution of milk quotas from 2015.

UK organisations have called for the establishment of a supply chain code of practice for the milk sector, which is supported by government. But as issues with the groceries supply chain code of practice have shown, without effective policing the code may not be effective at restoring a sense of fair play to the dairy sector.

Mr Raymond added, “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.”

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