UK farmers protest over fear of financial ruin from low milk prices

By Kate Holton

LONDON, Aug 10 (Reuters) - British farmers warned on Monday they were facing financial ruin with falls in the price of milk forcing many out of work and spurring others to blockade distribution centres and walk cows through supermarkets.

Farming unions from across the country were meeting in London to urge the government to provide more help for an industry that has seen a 25 percent year-on-year drop in the amount farmers are paid for milk.

The National Farmers Union (NFU) estimates that the majority of dairy farmers are now selling milk below the amount it costs to produce it. "I was earning a pittance," said Peter Parkes, a farmer who pulled out of dairy produce 18 months ago.

Farmers around the country have been protesting against depressed prices for over a week, with videos online showing them entering supermarkets and clearing the shelves of milk.

On Sunday a group of protesters entered a supermarket in Stafford, central England, with two cows, to "show" the animals just how cheap their milk was.

"If the milk stays this cheap in six months time, 12 months time, there will be no fresh milk left in this country," one protester said in a video posted online, as bewildered shoppers looked on. "We cannot afford to sell milk at this price."

AHDB Dairy, the industry body, said the collapse in prices, sparked by lower demand from China and a price war among British supermarkets, had resulted in more than one milk producer going out of business per day in the last year.

"The situation many of our members are experiencing has become a crisis," said NFU President Meurig Raymond. The NFU said farmers in the livestock and dairy sectors were "facing financial devastation".

Britain's supermarkets have been engaged in a vicious price war in recent years, as the success of discount chains Aldi and Lidl has prompted the more established names in the sector to slash prices for certain basic produce.

The NFU said retailers Tesco (Xetra: 852647 - news) , M&S, Waitrose, Sainsbury (Amsterdam: SJ6.AS - news) 's and Co-op paid farmers a price based on the cost of production, but others -- including Morrisons, Asda, Aldi and Lidl -- did not.

The fall in milk prices has had global ramifications, with producers from New Zealand to Ireland (Other OTC: IRLD - news) struggling in the new economic environment. Agriculture, fishing and forestry together account for 0.6 percent of UK GDP. (Editing by Mark Heinrich)