Following dairy giant Dairy Crest’s announcement last week that it will be cutting farm gate prices from tomorrow, Robert Wiseman Dairies today confirmed it will follow suit.

Robert Wiseman Dairies will be cutting the price paid to its farmer suppliers by 2 pence per litre from 1st June, meaning its standard price paid per litre will drop to 26.42 pence. The company said the decision “reflects the continuing and sustained impact of a challenging market environment and more recently a collapse in the value of bulk cream.”

Wiseman claimed that, although higher returns for cream had buoyed up business last year, the collapse in bulk cream value since the beginning of 2012 has resulted in “an untenable position” for the company.

Pete Nicholson, Wiseman Milk Procurement Director, today commented, “After a three year period which has seen our farm-gate price increase five times by a cumulative 4.55ppl, we must now reflect the competitive environment we are operating in and substantially lower returns from the bulk cream market. It is essential that we continue to strike a balance between paying a competitive milk price to farmers who are not aligned with major retailers, and the ability to compete within our sector of the dairy industry.”

However, the latest price cuts from processors and retailers come at a time when farmers face increased pressure from rising input costs. Dairy producers have warned that milk costs have become detached from production costs, affecting their already slim profits.

It currently costs an estimated 30.1ppl to produce milk in the UK as prices have risen for feed and fuel in particular; last year saw price increases of 17 and ten per cent for feed and diesel respectively. Nevertheless, returns for producers remain below the EU average.

Farming unions have expressed great dissatisfaction with the company’s decision. Unions have claimed the latest round of price cuts are evidence that drastic changes are needed in the milk supply chain. Farming representatives last week made alls to increase the equitability of the supply chain; at present, it takes a long time before farmers see any reward from beneficial market conditions, whereas shocks rattle back along the chain much more rapidly. One suggested way to exert more influence and so see benefits is through forming cooperatives.

NFU dairy board chair Mansel Raymond said, “The NFU is dismayed at news of another processor price cut. Wiseman’s move to slash two pence off a litre comes at a time when farmers cost of production is in excess of 30ppl. This is another devastating blow to the farming businesses affected.

“Again the bulk cream market has been cited as the reason for the cut. Yet it’s clear that the price that liquid milk is sold for is the main contributing factor and that is unsustainable.”

Amongst dairy farmers a clear picture has developed that, contrary to the promises of the corporates, the wealth is not trickling down.

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