Newspaper article The Journal (Newcastle, England)

Skimming off Profit in Milk; Some 2,500 Dairy Farmers, Including Many from the North East, Converged on London Last Week to Demand Action over a Crisis Which Many of Them Believe Could Force Them out of the Industry. but, as KAREN DENT Discovers, the Issues Involved Are Far from Straightforward

Newspaper article The Journal (Newcastle, England)

Skimming off Profit in Milk; Some 2,500 Dairy Farmers, Including Many from the North East, Converged on London Last Week to Demand Action over a Crisis Which Many of Them Believe Could Force Them out of the Industry. but, as KAREN DENT Discovers, the Issues Involved Are Far from Straightforward

Article excerpt

Byline: KAREN DENT

AN oversupplied milk market and pressure on prices are bringing the industry to its knees, with the average dairy farmer expecting to lose pounds 40,000 a year because of the latest cuts in the price they are paid for their milk.

The dairy summit on Wednesday was sparked by price cuts imposed by the big dairy companies, which supply supermarkets and shops.

Robert Wiseman Dairies, Arla Foods UK and Dairy Crest have all announced reductions of between 1.65p and 2p in the price per litre (ppl) they pay their contracted farmers.

The cuts, on top of previous reductions in May, come in on August 1, leaving the average dairy farmer selling milk for less than the cost of production.

Dairy farmers who have signed contracts with processors have little choice but to accept the price because they are locked into contracts for anything up to a year. There is a currently an industry-wide campaign to introduce fairer contracts on a voluntary basis.

Bruce Jobson, a Northumberland-based expert on the international dairy market, said the situation is complex.

"There are two problems - the supermarkets are involved with the price pressures but the big problem is the big drop in the price of cream," he said.

"In the UK, we produce surplus amounts of bulk cream because we like skimmed milk, and it has to go somewhere.

"It goes to Europe, where it is turned into butter and cream but milk production has increased in Germany and France, and this has increased the amount of cream on the market.

"The estimated amount in storage has gone up from 20,000 tonnes to 90,000 tonnes because of the oversupply. As far as the UK is concerned, the cream price dropped by 50% in November. It is untenable for the processors but farmers don't want to hear that."

The situation with the supermarkets, which have so often been labelled the bad guys, is not clear cut either.

Not all supermarkets buy milk from the big processors; Sainsburys, Tesco, Waitrose and M&S buy directly from their own pool of dairy farm suppliers, with payments linked to a cost of production (COP) business model. …

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