The reasons behind a decision by a second milk processing company in a week to cut its milk price has been branded “deplorable” by the National Farmers’ Union.
After a year in which 60 Yorkshire dairy farms went out of business alone, there have been some tentative signs that the market may be beginning to stabilise after 12 months of plummeting prices at the farm gate.
Yet, Müller Wiseman has followed in the wake of Dairy Crest this week in further reducing the price it pays to farmers. It is the nature of the decision by the former however that has particularly rankled with the NFU.
From March 5, Müller Wiseman suppliers will receive 1.75 pence per litre (ppl) less - leaving prices at 24.15ppl.
Carl Ravenhall, managing director of Müller Wiseman Dairies, said: “After leaving our milk price unchanged for February, we must now reflect further drops in the value of cream and butter products and the need to be competitive in the supply of dairy products to our customers in our March price.
“We continue to take very difficult and painful decisions within our company to ensure that our costs are as low as they can be, but our business cannot compete if the cost of the milk that we buy from farmers is substantially higher than that of our competitors.
“We very much look forward to seeing an improvement in the market for farm gate milk which can then be reflected in the milk price which we can offer.”
Dairy farmer and NFU dairy board chairman Rob Harrison was incensed by the claim that the price drop was an attempt to “remain competitive” in the milk market, responding: “We have seen the farm gate price dropping rapidly over the past nine months which has put many UK dairy farmers in incredibly difficult positions, with many considering their future in the industry. The fact that Müller has said the March price remains to be ‘one of the best available’ depicts a dire situation for the dairy sector.
“We can accept that this has been a result of dairy market declines - DairyCo figures clearly show that the cream income to a processor has fallen by 45 per cent since January last year. However, there are now some positive signs on the European market and FrieslandCampina increased its February milk price by €1.25 per 100kg milk and stated that ‘the upward price trend of foil cheeses, milk powders and butter’ will stabilise prices across their reference companies, and New Zealand has reduced its milk production forecast.”
Mr Harrison added: “To see Müller Wiseman declaring that it is following others with price cuts is a deplorable change in direction. We need to develop trust between processors and farmers to ensure that changes are reflected honestly and with clarity, ensuring that when markets do recover this happens quickly to stop farmers suffering.”
Despite the improved market signals, global supply of dairy products remain out of sync with supply.
Earlier this week, Dairy Crest cut its farm gate milk price by 1.5ppl but said the price would not fall further before July.
Arla, which works with more Yorkshire dairy farmers than any other milk processor in the country, currently pays farmers 24.87 ppl.
‘Give more notice to farmers’
Retailers have been reminded of the role that they can play to offer better protection from price changes to farmers.
NFU dairy chief Rob Harrison said: “Unfortunately Dairy Crest’s price drop came immediately after Morrisons announced the result of its recent milk tender - reducing the volume of milk it will procure from Dairy Crest by a third and giving just one month’s notice. Such short term notice periods are completely unacceptable in the supply chain. The NFU has worked hard to ensure better terms and conditions between farmers and processors, but these mean nothing if changes can be made in such short timeframes higher up the chain.”