Markets Processing

Price Cuts a “Kick in the Teeth” for Disappointed Farmers

UK – Latest January milk price reviews mean average farmers are now making significant losses on every litre produced, according to the National Farmers Union.

4 December 2014

2 minute read

Europe

First Milk and Dairy Crest this week announced price cuts of over one penny per litre, to take effect on January 1 and 3 respectively.

Producers supplying DairyCrest’s Davidstow cheese and standard liquid contracts will lose 1.25 pence per litre, leaving the New Year price at 27.79 pence per litre.

First Milk’s 1.1 pence cut is on its liquid pool.

Why do farmers never get the market highs when global commodity prices are at their highest? Rob Harrison, NFU.

Challenging markets were blamed by both companies for the price moves, with DairyCrest “pleased” of its December price hold.

DairyCrest procurement director, Mike Sheldon, had hoped the market situation would have started improving by now.

He said the company is operating in a “very challenging market” but that DairyCrest, “cannot continue to maintain the price against the backdrop of such extreme market volatility and increasing levels of milk production.”

First Milk Chairman, Sir Jim Paice, said: "Unfortunately market indicators for core dairy products have declined further since the start of November. In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further.

In response, the NFU called on the government to ease the impact by lobbying in Europe for more market intervention on dairy products.

Addressing market volatility as a reason given for the cuts, NFU dairy board chairman Rob Harrison said: “I do understand the market fundamentals but ask this: Why do farmers never get the market highs when global commodity prices are at their highest but suffer more than they should when commodity prices hit the floor?”

“While the global market situation remains difficult, we need UK processors and retailers to support our farmers in ensuring a long term sustainable future for domestic milk production.”