August milk price cut

Müller subisidary Robert Wiseman has backed down from imposing the milk price cut it had announced for August 1, although the initial June price cut remains in force. The move follows similar announcements by Arla, Dairycrest and First Milk, as well as increases in retailer bonuses, such as that announced by the Coop on July 20.

In a statement, Wiseman communications director Graeme Jack confirmed that the East Kilbride-based group relies on buoyant industrial cream prices to top up aggregate earnings on every litre of raw milk collected. He refers to: “…the significant loss of income we suffered further to the substantial decline in cream values experienced since the beginning of the year which left us unable to sustain the milk price we were paying.”

Wiseman’s predicament is no different to any other processor with more than one market for the milk fractions it sells. It is a structural problem for markets that expect to pay what they think a product is worth rather than what it costs to produce.

Like any other business, milk producers need to be able to cover their costs, otherwise production will cease. They also need to cover their costs on a more permanent basis than ad-hoc rises in retailer bonuses, which are product-specific.

The Tenant Farmers’ Association and the National Farmers’ Union welcome signs of progress, as do Farmers For Action. Chairman David Handley remains as firmly committed as ever to the long term outcome.

Writing on the FFA website, Handley said the Wiseman climbdown: “…sends a very strong message regarding unity in the dairy industry. The united coalition group together with united dairy farmers, supported by the media and general public, have taken us up the first step towards a sustainable dairy industry, for the future of the next generation of dairy farmers. The coalition will now meet again early next week to plan the next part of our strategy which is to find the money that was taken off dairy farmers in May/June 2012. ”

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Peter Crosskey is based in the UK.