Yahoo Finance NFU Warns Milk Price Cuts Threaten Industry
Dairy farmers have warned that cuts to milk prices are threatening to drive them out of business.
Hundreds of farmers have gathered in London for talks on how to fight back against the cuts by leading processors Arla Foods UK, Robert Wiseman Dairies and Dairy Crest.
The reductions of up to 2p per litre from August follow cuts for many dairy farmers imposed in the spring, and the NFU has warned that producing a litre of milk now costs many farmers significantly more than what they are paid for it.
The cuts could reduce the average dairy farmer's annual income by up to £40,000, the NFU warned.
Vice president Adam Quinney has urged Farming Minister Jim Paice to "bang heads together" within the sector to ensure farmers are paid a fair price for their milk, and to push back on regulation that adds costs to producers.
He said farmers who do not have contracts that see them supplying Tesco (LSE: TSCO.L - news) , Sainsbury (LSE: SBRY.L - news) 's, Marks & Spencer (Dusseldorf: MA6.DU - news) or Waitrose will be losing £350 to £400 per cow per year.
"The latest round of cuts to milk prices by three major dairy processors will mean dairy farmers are making a significant loss for every litre of milk they produce," he said.
He said processors had competed with low milk prices in order to win contracts with supermarkets.
They had met the shortfall by selling cream on world markets at good prices which had now fallen, making them push the price of milk down for farmers.
The industry had already seen dairy farmer numbers fall from 17,000 in England and Wales to just 11,000 over eight years, and the situation would get worse if the current problems were not resolved, he warned.
The NFU said it expected around 2,000 dairy farmers at the summit in Westminster.
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