25 May 2007

2 minute read

Europe

The call comes following the release of ‘British Milk – What Price 2007?’, a report examining developments in production costs and other market related factors over the past four years. The report concludes that the average cost of milk production has increased by 16.43%.

NFU Cymru President, Dai Davies said, “This report highlights what we have known all along – that despite being among the most efficient milk producers in Europe, our farmers are facing a bleak future. The gap between what they are paid for their milk compared to what it costs to produce it is widening.

“However, the report also shows that there is hope for this sector with strengthening markets, particularly for cheese, whey and milk powder, increased consumer demand and growing public concern on the ethics of food sourcing by retailers.

“The message is clear, we need to re-address the imbalance in the supply chain, increase the milk price at farmgate and above all, give producers increased confidence to invest in the future of their business. If we fail to value our milk producers now, we face losing them forever.”

RABDF Chairman, Lyndon Edwards said, “The dairy sector faces an unsustainable situation. The average farmgate milk price in 2006/07 was 17.90ppl, whilst our work shows that the average cost of production during the same period was 21.32ppl, without taking into account the exceptional costs farmers were faced with or providing any scope for essential business re-investment.”

RABDF and NFU Cymru carried out a similar exercise 12 months ago which concluded that farmers were losing just over 1.5ppl.

Dai Davies concluded, “The increasing cost trend will continue in the forthcoming year and farmers will also be faced with substantial additional regulatory costs, such as the impact of Nitrate Vulnerable Zones (NVZ) legislation. We believe that it is imperative that the supply chain acknowledges the significance of our findings and swiftly takes action to counteract the dire situation British dairy farmers are contending with.

“As far as the retail sector is concerned, Tesco’s recent announcement to offer direct producer contracts is a welcome boost to confidence. It is hoped that it will have positive connotation for many, both directly and indirectly. However, these direct contracts offered are only available to limited numbers of producers, therefore it is of paramount importance that the remaining retailers and other parts of the supply chain follow suit in order to ensure the long term viability of the whole dairy industry.”

TheCattleSite News Desk