Solutions urged to '˜worst ever' dairy price downturn

Even the most efficient farmers cannot survive current prices over a sustained period, with some farmers receiving well below 16 pence per litre, the dairy board chairman of the National Farmers’ Union (NFU) said.

Farming Minister George Eustice told MPs in the Commons this week that the Government was “constantly” meeting with retailers to improve the situation and that some had “stepped up to the plate” by offering aligned contracts - whereby the farmer sells milk at an agreed price to a supermarket via a processor or co-operative.

But he conceded that the dairy sector’s voluntary code of practice is of little help when prices are so low.

The average milk price for March was the lowest it has been since 2009 and major milk buyers such as Arla, First Milk, Muller and Dairy Crest have announced fresh milk price cuts which will come into force in the coming weeks.

NFU dairy board chairman Michael Oakes called on all within the supply chain to recognise the seriousness of the situation and to seek solutions.

He said: “There’s no question that this is the most difficult time many dairy farmers have ever faced with milk prices far below break-even levels. “In the Copa milk meeting this week (in which European farmers and agri co-operatives are represented) we saw the same sentiment shared across Europe.

“What we have seen is that UK dairy farmers are reacting to the market reality - with daily milk volumes now falling below production this time last year. This unfortunately is not the case elsewhere in Europe.

“Processors must clearly explain to farmers what they are doing to try to add value at this difficult time and farmers need to be honest with suppliers on their production plans for the months ahead.”

In the Commons, Mr Eustice explained the Government’s position, saying: “We are constantly meeting retailers to try and improve the contracts that they offer, to encourage them to do more aligned contracts, to encourage them to source more dairy production and many of them are now offering those aligned contracts or higher prices to their farmer suppliers.”

Kevin Hollinrake, Conservative MP for Thirsk and Malton, asked Mr Eustice if he agreed that now is the time for supermarkets to pay a fair price to farmers for milk.

Mr Eustice said many supermarkets are selling their milk at a loss and that the real issue is low global commodity prices.

Asked what the Government was doing to strengthen the dairy code of practice - set up to ensure fair contracts with farmers - Mr Eustice said: “The reality is it does tend to help farmers more in a rising market when prices are firm than in a very difficult time when we have oversupply, because the critical element is it gives farmers the chance to walk away at three months’ notice and gives them the ability to extract a better price.

“We will be reviewing the code again with a view to improving it and strengthening it again.”

MP SECURES COAST TO COAST TALKS

During Commons questions to Ministers for the Department for Environment, Food and Rural Affairs, Environment Secretary Liz Truss was pressed on the progress of Defra’s campaign to champion British food.

She urged regional food producers to seek protected status for their products and highlighted Yorkshire’s three such designations compared to Lancashire’s one.

Meanwhile, Rishi Sunak, Tory MP for Richmond, secured the word of Rory Stewart MP to meet for talks about his campaign for the Coast to Coast route to be granted National Trail status.