Morrisons follows Co-op in raising milk payments amid farmers' protests

 

Dairy industry expert Ian Potter says farmers lose money on milk production

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A second retail chain has raised payments to milk suppliers after fresh protests by dairy farmers.

Morrisons announced increased premiums on milk for farmers, after a similar move by the Co-operative on Friday.

The government has said it will hold talks on securing the dairy industry's future with farmers on Monday.

The BBC's Norman Smith said ministers hoped more retailers would follow the Co-op and Morrisons' example and a code of conduct on pricing could be agreed.

He said the government wanted to avoid more blockades of milk processing plants by farmers who have been warning they could go out of business.

The protests which began on Thursday night continued on Friday and Saturday.

Campaign group Farmers for Action (FFA) is warning that cuts in the price paid to suppliers by dairy processors, combined with rising feed costs, could force hundreds of dairy farmers out of business.

Further protests

Analysis

Although minsters are adamant they will not legislate or fix milk prices, they are determined in the words of one source "to bang heads together".

The hope is that more supermarkets will follow the example of the Co-op and Morrisons, thereby easing the immediate pressure on farmers and averting the threat of more blockades.

This, it is hoped, will provide a "breathing space" in which ministers can seek to get all sides to agree to a new code of conduct governing milk prices.

That would slightly tilt dairy contracts in favour of the farmers by ensuring retailers could not cut prices without giving at least a month's notice. At present it is claimed some give only a few days' warning.

It would also allow farmers to terminate contracts with just three months' notice rather than the current 12-month contracts.

Ministers insist both sides need to be ready to compromise but they are "cautiously optimistic" that a deal can be reached this week.

The UK could end up having to import much of its milk, says the FFA.

Some dairy farmers say they are planning further action.

A second protest is planned for Sunday night at the Robert Wiseman dairy processing plant near Bridgwater, Somerset. The FFA's West Midlands branch has also warned of further protests.

Supermarkets assess how much it costs farmers to produce milk and then decide how much to pay above that as a premium, taking into account factors such as rising feed prices.

The FFA says supermarkets must pay more for milk and that this should come out of the retailers' profits rather than the cost being passed on to customers.

On Saturday, Morrisons announced it was increasing the premium to farmers on milk from 1p per litre (ppl) to 3ppl, as well as introducing support payments equivalent to 3ppl for farmers affected by the recent bad weather. It brings the total price they receive to 31ppl.

The increases - from 1 August when the processors' latest cuts come in - would help "to support all farmers, not just those that have dedicated contracts", said commercial director Richard Hodgson.

'Sustainable model'

On Friday, Co-operative announced the premium farmers receive would rise to 2.57 pence per litre with immediate effect, and to 4.27ppl when the processors' price cuts came in from 1 August. It brings the total price they receive to 29ppl.

Asda had already announced it would increase its premium from 1ppl to 3ppl from 1 August, meaning dairy farmers will continue to be paid 27.5ppl after the processors' cuts.

Milk graphic

Co-op and Asda ruled out the increase being passed on to consumers through rises in the price of dairy products. Morrisons has yet to respond.

National Farmers' Union president Peter Kendall welcomed the announcements but said a "sustainable funding model" was needed.

Environment Secretary Caroline Spelman and farming minister Jim Paice are to meet dairy farmers on Monday in Llanelwedd, at the Royal Welsh Show, one of the largest agricultural events in the UK.

The BBC understands the government is also arranging to meet representatives of the big supermarkets in the next few days.

Mr Paice said the price cuts by four leading dairy processors were "a severe blow for dairy farmers".

"Government cannot and should not set prices but I will do everything in my power to get all levels of the supply chain to make the real changes needed to guarantee the industry's long-term future," he said.

"Farmers and processors need to work together through an industry code of practice on contracts and retailers have to help shift the focus away from short-term practices which are completely unsustainable."

A spokesman for the Department for Environment, Food and Rural Affairs (Defra) said talks with dairy farmers aimed at agreeing an industry code of practice had been brought forward to Monday because the situation "must not drag on any longer".

Profit margins

As many as 400 farmers and 20 tractors blockaded a processing plant in Foston, Derbyshire, on Friday night, the FFA said.

Meanwhile, a four-hour blockade of the Robert Wiseman Dairies processing plant in Droitwich Spa, Worcestershire, involved about 200 protesters and 40 vehicles, according to West Mercia Police.

Farmers have been out in force to call for higher payments for milk

The FFA said 750 of its members in total turned out at both protests.

It followed protests by hundreds of farmers on Thursday night at sites in Somerset, Yorkshire and Leicestershire.

In the dairy industry processors set the price they pay farmers for their milk.

From 1 August, Robert Wiseman Dairies and First Milk are cutting the price by 1.7ppl, Arla Foods UK by 2ppl and Dairy Crest by 1.65ppl.

They say they have no choice because the price they can sell cream for on the commodities market has fallen sharply in the past 12 to 18 months.

The NFU said the cuts would be felt by more than a quarter of suppliers. An average farmer with about 150 to 200 cows, the union said, would lose about £37,000 in revenue from the combined effect of previous cuts in May/June and the new cuts in August.

Ian Potter, a dairy industry commentator, said: "The cost of production at the moment is over 30ppl and rising because with the wet weather the cost of feed is increasing quickly for the coming winter.

"In the last two months processors like Arla have dropped the milk price that they pay to farmers by 4ppl so farmers have been facing competing forces - the cost increasing and the price that they sell the milk for dropping."

He said retailers were making money on liquid milk while processors were working on "very thin or non-existent margins".

"They (processors) are not making any money, with a 4ppl cut the farmers are losing money, and the only people who are left are the retailers, who are making healthy margins," he told the BBC.

Farmers believe that blockading the processors would in turn put pressure on major retailers, he said. But he added it was likely farmers would begin blockading retailers this week.

 

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  • rate this
    0

    Comment number 900.

    Well roll on the day when the only milk you will be able to buy is UHT milk or powdered milk from were ever
    Even if the retail price of milk went by 2 pence per pint that would not hurt people and the supermarkets passed on another 2 pence per pint every one would be paying a faire price for milk
    Wars are won by been able to starve people in to submission
    look at sweets to price of milk

    .

  • rate this
    0

    Comment number 899.

    807. Steve Lynham
    ... it was about trying to bring down a Labour government before it could get the Hunting Bill into law.

    Yes that would be the Labour Government who devoted 73 hours to the poor little foxes, and 4 hours to the invation of Iraq

  • rate this
    0

    Comment number 898.

    @894
    You're right. That's exactly how many dairy farmers feel at the moment and they are making sure you know about it.
    In the meantime, if milks goes up by ten percent in cost and you can't afford it then just use ten percent less in your cup of tea or whatever.
    Alternatively, force a load of farmers to go to foodbanks. Good job they are they fastest growing charity organisations apparently.

  • Comment number 897.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -1

    Comment number 896.

    Kiwigb , the debate in the UK is over the price of drinking milk,

    New Zealand milk , which is 12,000 miles away is of no relevance to that market.No one in the UK could drink it other than if it were to be UHT.
    NZ has raised production by more than 50% in 10yr , much from ex sheep farms in S Island , where there is a winter.

  • rate this
    +2

    Comment number 895.

    890.
    york1900


    888.billyhano
    "With out the farmers they would have NO business"

    ----
    When the farming industry was practically shut down for months, during the foot and mouth crisis, I do not recall any supermarkets going out of business. Nor do I recall any milk shortages.

  • rate this
    -1

    Comment number 894.

    @892
    I'm glad you're pleased with your service and you're happy to pay extra for it. That is your right. But a lot of people do not have a choice. There is a saying - the straw that broke the camels back. There are at the momernt, a lot of straws that vying for the one that does that smacks the camel on the head and jumps up and down on the camels back like a gymnast on speed.

  • rate this
    0

    Comment number 893.

    883.kiwigib

    Well explained, difficult to put actual financial amount that the Single Payment Scheme (EU Subsidy) is for a dairy farmer as its down to the size of the land and level of stewardship the land is being maintained

    The general public need an example of a dairy farmer and what the farm Single Payment is and the farm costs, which clearly demonstrates the threat to their business

  • rate this
    -1

    Comment number 892.

    Tell me Kiwigib , do New Zealand farmers have to locomotion score their cows? The supermarkets insist on it here for direct suppliers.

    Are NZ farmers still docking their cow`s tails? Its banned here.

    Do NZ cows have passports ? All ours have to by 27 days of age.

    Are NZ farmers allowed to bury dead cows on farm? Not here.

  • rate this
    0

    Comment number 891.

    I have four pint bottles of milk delivered door each week at a cost of 57p per pint - very expensive compared to the undercut supermarket prices. However, I'm quite happy to pay the extra to keep our local milkman and dairy farms in business. As well as milk, he can supply fresh local eggs and farm baked bread.

  • rate this
    0

    Comment number 890.

    888.billyhano
    With out the farmers they would have NO business

  • rate this
    0

    Comment number 889.

    So cowman your answer is farm standards equals artificial environments with cows penned in (aka Euope/UK) versus free range or (3 animals per open acre of farm land as is the standard in NZ). And yes I do know about dairy farming in the UK versus NZ.

  • rate this
    0

    Comment number 888.

    A collection of farmers preventing another business from making a lawful living, are called a "blockade". It is legal apparently.
    A collection of workers preventing another business from making a lawful living, are called "secondary pickets". It is completely illegal.

    Once again, there is one law for the few, and one for the many.

  • rate this
    0

    Comment number 887.

    your right885 (cowman g) I don't milk cows, BECAUSE THERE IS NO MONEY IN IT....

  • rate this
    0

    Comment number 886.

    Kiwigb, thanks for that, it sounds plausible.
    So... UK taxpayers do not subsidise UK dairy farmers, they partially and equally subsidise ALL EU dairy farmers and therefore to avoid indirectly subsidising milk, the UK would have to leave the EU or a miracle like reform of CAP would have to happen, despite decades of little movement on that. Seems dramatic just to save a few pence on a pint of milk.

  • rate this
    -1

    Comment number 885.

    Well I`m probably one of the very few here who actually milks cows for a living so might know thereof of which I speak.So Kiwigib unless you have actually had to pass UK Farm Assurance standards every 17 months to remain in business like I have to , I don`t think you understand Farm Assurance as it is in UK.
    EU standards are not the same

  • rate this
    0

    Comment number 884.

    Is there any dairy produce in milk nowadays? I thought it was made in a lab!

  • rate this
    +1

    Comment number 883.

    Chris, farmers are subsidised through the CAP and milk quotas, the farm/land stewardship payments, and they are protected from international competition through the EU placing quotas on countries such as NZ, Australia, the US and Canada supplying certain competing agricultural products to the EU/UK .

  • rate this
    0

    Comment number 882.

    You can only have cheap milk as long as farmers are there to milk cows once we get to a point were there are no dairy farmers to supply the UK market
    We will be at the hands of the bank traders and countries who do not have so good control of there farmers
    where we would find that we were been supplied with over priced milk and low quality milk in our shops


    -

  • rate this
    +1

    Comment number 881.

    @878 Karen
    What a lot of people don't realise here is that the subsidies from the EU ultimately go to the landowners, like the Duke of Westminster. It's not the supermarkets that are squeezing prices, it is the elite 1%. Yet the 'campaign' to give dairy farmers a better deal will hit the most vulnerable in society. It's amazing to me that people cannot see that.

 

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