Milk producers in the UK threaten action

UK dairy farmers are threatening direct action over milk producer price cuts announced by major processors. Farmers For Action (FFA) leader David Handley spoke to ARC2020 this morning about the frustration that is boiling over among dairy farmers. Some of this anger also came over in BBC interviews on this morning’s Farming Today programme.

With a herd of 200 cows, Handley’s own dairy operation faces a GBP 3000 a month cut selling through a milk broker. “A Wiseman producer I spoke to had a GBP 6000 cut in June and the latest cut will take another GBP 5000,” he told ARC2020. “The consumer does not need to pay more. Farmers are doing business with greedy people.” What is needed is a fairer share of the retail ticket for farmers. It is hard to know where to start, but with 10 years of experience in marketing earlier in his career, Handley can spot the manipulation of consumers a mile off. The Sainsbury cost-plus 30.5p/litre contract for liquid milk is a step in the right direction, for instance, but does not go far enough. 

“Shoppers hear about the liquid milk and they think that it must work like that across the board. But they don’t get the full story about what farmers earn on the milk supplied for cheese or butter.”

Milk price cuts in the UK

UK supermarket milk supplier Robert Wiseman this week confirmed a further 1.7p per litre cut in its producer payments to take effect on August 1, reducing its standard litre price to 24.73p/litre. This follows a previous cut of 2p/litre in June. Dairy Crest and Arla Foods UK followed Wiseman by making similar producer price cuts. Earlier this summer, Wiseman won significant additional white milk contract volumes from Tesco, where a 2 pint polybottle (1.136 litres) still costs 89p. Wiseman justified the producer price cut by pointing to its falling earnings from cream that comes out of the milk when the fat content is standardised. For all but the Christmas season, the UK has traditionally been a net exporter to northern Europe of industrial bulk cream. This is the counterweight product for liquid milk standardised at 4%; 2% and 0%.

The Wiseman announcement got short shrift from Tenant Farmers’ Association vice chairman Stephen Wyrill, who described it as “economic slavery,” adding that: “It would appear that retailers and processors are able to call the shots to the detriment of primary producers”

On the basis that milk costs about 30p/litre to produce, the TFA argues that a tenant dairy farmer with 100 cows will be out of pocket by between GBP 50,000 and GBP 60,000. These are running costs, before counting contributions to processor’s investment programmes. Just to add insult to injury, Wyrill explained that dairy farmers have been required to invest in new processing capacity for some years now, on the understanding that profits would somehow come back to dairy farmers when the new capacity is operational. “However there is no evidence that this has happened or ever will happen,” warns Wyrill.

NFU dairy board chairman Mansel Raymond summed up the situation: “For me, this just typifies everything that is wrong with this market place. It is time for liquid milk processors – and retailers and other major buyers – to take responsibility for this totally dysfunctional supply chain. It fails to address the one basic need of any business – the need to cover costs and make a profit.”

Peter Crosskey
About Peter Crosskey 282 Articles
Peter Crosskey is based in the UK.