The decision by a major milk processor to slash the price it pays to dairy farmers has been branded “a catastrophic example of hypocrisy and unfairness”.
Robert Wiseman Dairies yesterday announced that it was giving suppliers a month’s notice of a 1.7p-per-litre reduction in the farm-gate milk price.
The company said the cut, which comes as many dairy farmers struggle to turn a profit after years of low prices and high overheads, was necessary due to the “collapse in the value of the cream in each litre of farm-gate milk over the last 12 months”.
However, NFU dairy board chairman Mansel Raymond said farmers shouldn’t be made to pay the price for a struggling market.
“Wiseman have blamed the falling cream values that are causing losses in their business as their reason to cut farm-gate milk prices; So how can it be right for a processor to just pass this loss onto their farmer suppliers?” he said.
“As highlighted by Sainsbury’s announcement of a cost of production-linked price rise to suppliers today, the cost to produce a litre milk on farm is now well over 30p, yet Wiseman will now be paying their suppliers 24.73p per litre. This is simply a hospital pass by Wiseman to their already beleaguered farmer suppliers.
“If Wiseman has sold processed liquid milk into the marketplace at a price that can only cover costs of production, when propped up by record high cream values like those seen in April 2011, then their business strategy is totally unsustainable and farmers will be considering their options.”
After a 2p-per-litre cut in June, Wiseman said it had hoped that the need for further adjustment to its milk price could be negated by a sustained and significant rally of commodity market values, a rally that has not materialised.
While markets have improved from the lows of recent weeks, they remain at levels not seen since 2010, when the average milk price was 24.19p per litre.
Milk procurement director Pete Nicholson said: “We know that this news will come as a major disappointment to Wiseman Milk Group members. We have done everything we can to minimise the reduction in our farm-gate milk price but we must now reflect the substantially lower returns from the markets which we serve.”
Wiseman Milk Partnership acting chairman Roddy Catto said the cut will be “devastating” for many farmers.
“The Wiseman Partnership Board put forward a very strong and justifiable case to keep the milk price as is. We have been unable to change the company position and as such we certainly do not give this move our approval.
“We will, however, continue to work with the company to build a recovery back to milk prices that reflects a more sustainable position for our members at the earliest opportunity.”