At the mercy of volatile world markets, British milk prices have been plummeting for 12 months as rising supply outstrips falling demand, fuelled largely by China and the Russian trade ban.
The slump, which follows a short period when milk prices hit their highest level for several years, has seen the total number of dairy farmers in the UK fall by more than two-thirds since 2005 to below 10,000 for the first time.
North Yorkshire has lost 55 dairy farmers in the last 12 months alone.
In a report published today, the parliamentary Environment, Food and Rural Affairs (Efra) Committee is urging the Government to intervene. It wants the Groceries Code Adjudicator’s (GCA) remit, which covers suppliers to the big supermarkets and retailers, to be extended to include dairy farmers.
A review of the GCA’s role has been promised but committee chairman Anne McIntosh warns the situation is urgent.
“The volatility of worldwide and domestic milk markets is making financial planning and investment impossible for small-scale producers unable to hedge against changes beyond their control,” Mrs McIntosh, Conservative MP for Thirsk, Malton and Filey, said.
“The vast majority of dairy farmers fall outside the protection offered by the GCA (Christine Tacon). She can only investigate complaints involving direct suppliers to the big 10 supermarkets and retailers, and as most milk production is small-scale, that excludes most dairy farmers.
“The Efra committee thought that was wrong when the GCA was set up in 2013, and events since then justify our view that her remit should be extended to include small-scale suppliers, whether or not they have a direct relationship with the ultimate seller of their produce.”
She also said the committee was “shocked” to learn that the adjudicator was still unable to levy fines on retailers because the Government had not yet set the level of fine she could seek, and called for the power to be activated before the general election.
Responding, in a statement, a spokesman for the Department for the Environment, Food and Rural Affairs, said the Government understood farmers’ concerns over the current pressures on milk prices and insisted that it was doing everything it could to help manage the situation - including giving dairy farmers the opportunity to form Producer Organisations to give them greater clout in the marketplace.
A dairy industry code of practice on contractual relationships to give farmers a fairer deal now covers 85 per cent of UK dairy production, the spokesman stated, adding the government was helping the industry to take advantage of new export markets and was pushing for better country of origin labels for British dairy products.
On the role of the GCA, the spokesman stated: “Its jurisdiction is currently limited to the scope of the Groceries Supply Code of Practice, and does not cover pricing - which is the responsibility of the Competition and Markets Authority. There will be a statutory review of the GCA next year.”
Dr Judith Bryans, chief executive of Dairy UK, welcomed the EFRA report but disagreed that new GCA powers are a solution.
“We do not believe that extending the powers of the GCA would help to address the challenge of volatility, and contractual relationships between farmers and processors that are already covered by the voluntary code.”
Duncan Pullar, director at levy-payer group DairyCo, said he would support an extension of the GCA’s powers if it ensured more transparent pricing and “an independent means of investigation where unfairness is suspected”. He said he believed the GCA had been beneficial, leading to improved transparency in contract arrangements and fair warning of price changes.