Asda said it would increase the amount if pays for milk provided through the giant Arla multinational by 2p a litre to offset a controversial price cut that has caused huge protests and left dairy farmers fearing for their futures.
Asda commercial director Karl Martin said: “We have listened to the concerns of our dedicated dairy farmers and recognise the pressures they are under. “
But appearing before the Environment, Food and Rural Affairs Committee yesterday, National Farmers Union dairy board chairman Mansel Raymond told MPs that many farmers “will not have the heart to go into the winter” if prices stay as low as they are.
Mr Raymond said a “massive” increase in the cost of production combined with reduction in prices paid for milk had left most farmers producing milk at a loss.
He warned Government intervention in the form of regulation is the only alternative if farmers and buyers cannot agree on a voluntary code to gain greater transparency around prices.
He said: “At the end of the day, if the milk price stays where it is, farmers will not be able to go into the winter ... They will not have the heart to go into the winter.”
Dairy farmers are protesting against cuts of up to 2p a litre in the amount they receive from major milk processors.
The latest cuts will see farmers paid around 25p a litre for milk, but Mr Raymond told the committee the average cost of production was actually 29p a litre.
Mr Raymond welcomed Dairy Crest’s announcement that farmers will be able to move their milk supply with three months’ notice if they are unhappy with price changes – instead of the current 12 months – as a “step in the right direction”. The move will give farmers more flexibility and comes as part of measures to help to offset the impact of damaging milk price cuts on the industry.
Asda’s director of external affairs Paul Kelly told the committee that any form of regulation would need to be “very carefully considered”, claiming that the supermarket giant had been able to maintain positive relationships with farmers without legislation.
Asked if he believed Asda had contributed to the problem by reducing prices, he said: “This is a (supply) chain-wide problem.
“To point to a particular sector and say ‘therein lies the problem’ is rather simplistic.”
Comment: Page 12; Dairy disaster: Page 13.