Milk producers are 'blindfolded and shackled' in milk price debacle

The price cutting actions of milk processors have been described as 'totally unacceptable' by farming leaders in Wales.

Milk producers who met recently on-farm at Rhuddlan in Clwyd described how little confidence they have in a market place that was simply not delivering sustainable returns to their businesses.

The last month or so has seen most buyers of milk cutting the price paid to farmers by two pence per litre (ppl). The cost of producing milk on farms is just over 30ppl and according to NFU Cymru the average price paid to farmers is a lot less at around 26ppl. This price is set at the discretion of the buyer with no opportunity for a farmer to terminate the contract.

“Milk buyers have been able to do this for the simple fact that they can on the back of weak contracts," NFU Dairy Board Chairman Mansel Raymond said.

"Our contracts offer us no protection or say in price determination, neither have we the freedom to move elsewhere should we disagree with price changes. Simply passing the pain of unsustainable wholesale and retail dairy product prices back to farmers via the raw milk price is unacceptable and farmers simply cannot stand price cuts of this severity.

“Milk buyers have the discretion to change a farmers key terms, yet the farmer is tied by a long notice period. Farmers need much more balanced contracts, where price is determinable or they have a say in its determination. The behaviour of processors is totally unacceptable and the days of milk buyers retaining complete discretion to change a farmer’s milk price must be put behind us by the terms of a voluntary code or by legislation.”

Also speaking at Pengwern Farm, Rhuddlan, farmed by Richard and Huw Jones, was NFU Cymru Milk Board Chairman Aled Jones who said: “I feel that as milk producers we are blindfolded and shackled – we have no idea or say in the price that we might be paid so are blind in that respect and we are tied in the main to 12-month contracts so we can’t actually terminate a contract and move our supply to another buyer.

“Whilst the world dairy commodity market has been under pressure it has been compounded here in the UK by retail price wars and milk processors constantly undercutting each other to gain market share. This must simply stop, milk is a fresh and precious product yet it is being sold as a cheap commodity. It’s being sold at a loss which is simply unforgivable.”