FARMERS have reacted angrily to an unexpected slashing of the price per litre price for milk.
The dairy sector was stunned after being told that, first, Robert Wiseman Dairies was cutting what it pays farmers and then by the news that Arla, another major dairy firm, was doing likewise.
What has made matters worse is that it is the second reduction in quick succession by Wiseman, which was taken over by Mueller in January this year. The firm announced a 2p per litre cut in June and has now said it will impose a further 1.7p cut in August.
Arla, whose brands include Cravendale, Lurpak and Anchor, said this week it was also slashing prices by 2p per litre. Arla processes around two billion litres of milk a year.
The chairman of NFU Scotland’s Milk Committee, Gary Mitchell, said: “The seriousness of this price move should not be under-estimated by anyone in the dairy supply chain or our politicians. A cut of this scale has sent shock waves through the whole dairy sector.
“Prior to being taken over by Mueller, Robert Wiseman Dairies had a proud record in delivering league-topping prices but for it to lead the way in slashing returns to its producers is in stark contrast to the company’s normal approach to pricing. In a few short months, Mueller/Wiseman has cut its farmer supplier prices by almost 15 percent.
“Although Mueller/Wiseman has opened the door, we would urge all other processors to take stock and seriously consider the importance of delivering a fair price, confidence and stability to their suppliers rather than adopting a knee-jerk reaction and following suit. There is every indication that the dip in demand for dairy products worldwide is over and producers have every right to expect prices to improve in line with strengthening markets.
“The anger among UK dairy farmers has never been more apparent. This self-perpetuating downward spiral in dairy prices, especially milk, is completely unnecessary and being driven by processors and retailers who are needlessly putting our dairy farmers in peril and jeopardising the privilege Britons have to a fresh pint.
“We know that global commodity values have fallen. However, when they were high, retailers and processors were too slow to pass the margins onto their producers who could have leaned on that extra money now in more difficult times.
“This is pricing discretion at its worst; retailers and processors are acting with impunity. In effect, by relentlessly and selfishly protecting their own margins, retailers big and small, the food sector at large and processors are combining to destroy a premium product that is unique to the UK and for which there is healthy demand among consumers.
“I challenge every dairy farmer who is on the sharp end of these cuts to call their producer representative and milk buyer to ask why their price has been cut and why they should continue to supply them. Perversely, farmers are over a barrel because of the terms of their contract and cannot simply walk away as they would be able to in most other areas of business.
“NFUS has been meeting retailers and processors in recent weeks and will continue to beat the drum on fair prices. Given that the British population has a healthy appetite for dairy products, surely there is plenty of money in the supply chain for everyone.”