Dairy farmers 'pushed to brink' with price cuts

Farmers say they will not be able to invest in the future

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Dairy farmers from across the UK have been "pushed to the brink" by cuts to the price of milk, a farmers' union representative has told a summit.

About 2,000 farmers gathered in London to protest at the latest cuts by processors of up to 2p a litre.

The NFU's Meurig Raymond said: "Society has to recognise what these dairy farmers have been put through by a market place that doesn't work".

The government said it hoped to see a "fair deal".

Agriculture Minister Jim Paice said he was close to getting agreement on a revised voluntary code for dairy contracts from milk processors.

Mr Paice said the average price of a pint was 49p, of which 16p went to the farmers, and the price cuts were "a massive burden for the vast majority of dairy farmers".

Four leading dairy processors have announced the latest cuts - applied from 1 August: Robert Wiseman Dairies and First Milk have both cut the pence per litre (ppl) price by 1.7; Arla Foods UK by 2.0ppl and Dairy Crest by 1.65ppl.

They blame falling commodity prices.

The cuts would be felt by 27% of producers, and impact on 25% of the milk market volume, farmers' union NFU said.

Mr Raymond called for the cuts to be reversed, saying: "These latest cuts are the feed bills, the wages, the housekeeping and will take us well into loss-making territory, with many farmers losing up to 6p per litre."

At the scene

Around 40 coaches arrived just before the summit started, carrying around 2,000 farmers. Many were from small family farms who have left their business for the day, stopping work, so they can voice their anger at the latest price cuts to milk.

I spoke to one farmer's daughter, who had dressed up as a cow in protest. She told me her father will have to hang up his boots if things don't change.

Many I spoke to were desperate for the dairy farm industry to change. One farmer from Oxfordshire had a banner comparing the price of a pint of water (£1.50) to the price of a pint of milk (86p). "It's ludicrous", he told me, "we won't have a dairy industry in 12 months, unless our voices are heard."

He was given a standing ovation after saying: "My final message is to retailers, processors, government and loyal consumers: It's time to back our dairy industry."

The NFU said an average farmer, with about 150-200 cows, would lose about £37,000 in revenue from the combined effect of cuts in May/June and August.

Those cuts would not affect farmers supplying Tesco, Sainsbury's, Marks & Spencer or Waitrose as they are paid directly by the supermarkets.

The government has announced an additional £5m from the rural economy grant scheme to help dairy farmers become more competitive, Prime Minister David Cameron said.

He also said he wanted to see a "fairer deal" between farmers and supermarkets.

Dairy Crest said it was doing all it could "to reduce the effect of the downward pressure from the market place on the milk price that we pay to our farmers".

How much is a pint of milk?

Year Price Year Price

Source: ONS

1991

32p

1992

34p

1993

34p

1994

36p

1995

36p

1996

36p

1997

35p

1998

34p

1999

34p

2000

34p

2001

36p

2002

36p

2003

37p

2004

35p

2005

35p

2006

35p

2007

36.8p

2008

42.1p

2009

44.1p

2010

44.2p

2011

45.3p

2012

46p

Cost-cutting measures included redundancies and the likely closure of two of its dairies, it said.

In a letter sent to farmers on 2 July, Arla said the company's performance suffered "primarily as a result of the ongoing impact of depressed commodity prices". It has cut its headcount and marketing spend.

Robert Wiseman Dairies said its price cut followed "a collapse in the value of the cream in each litre of farm-gate milk over the last 12 months".

Supermarket chains Asda, Morrisons and the Co-operative said they paid a premium above the market price charged by suppliers.

Cheshire-based farmer Stuart Yarwood said: "We are in a poor market place, we don't have any negotiation with the processors or the supermarkets because basically we have to take what we're given."

Brian Dalby, who has farmed near Lutterworth, Leicestershire, for 40 years, warned: "If the price doesn't change or these cuts aren't reversed - there will be a lot of people (who) go out of milk this winter," he said.

Some supermarkets sell non-organic milk for about 30p a pint, for larger bottle sizes. Single-pint bottles are offered at nearer 50p, with smaller shops often charging more.

Milk delivered to the doorstep costs consumers about 65p a pint.

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