The real cost of milk - what does it mean for UK farmers?

A year on from when the price of milk last hit the headlines, unions are once again asking for consistent milk pricing in the UK to enable dairy farmers to stay in business.


Farming unions have highlighted figures from a DairyCo report which said that average farmgate milk prices in real terms were similar this June to those paid to farmers in the early 1990s.


Taking into account the influence of inflation in the UK, and even with record high average farmgate milk prices of 30.77p/litre, June's prices were still similar in real terms to those recorded in the same month in 2002 and lower than the spike in prices recorded in 1995-96.


David Handley, chairman of Farmers For Action, warned of a new round of protests unless prices are increased and said that dairy processors need to be consistent in their pricing in-line with global markets.


NFU chief dairy adviser Rob Newbery said that the dairy industry was at a watershed moment, with September 1st being the pivotal date for a decision.


"Any sign of price rises for September are looking fairly faint now and any notion of nothing for October would be fairly serious and very bad news for the dairy industry," he said.


Mr Newbery went on to explain the need for determinable milk pricing mechanisms via the delivery of more formulaic contracts so that dairy farmers could fully understand how milk prices were going to change.


"Now is the time farmers need to be making investment decisions. We have got growing markets and our competitors are looking at how they invest and grow. We need to keep up with that growth," he commented.


For many farmers their business represents their only source of income and is hugely important, considering this it may be a smart move to look at prospects for growth in order to thrive in the future.


Gary Mitchell, National Farmers Union Scotland milk committee chairman, put the blame for the current situation at the door of the dairy processors, accusing them of changing tack on pricing mechanisms.


"If we want to get our farmers to understand the market, whether it's up or down, the processors will have to start being consistent.


“They use the market only to bring milk prices down, but they use their competitors' prices to stop them bringing them up," he claimed.


Agriculture specialists


Moorfields agriculture specialists have a great deal of experience working with farmers and rural businesses, guiding them a wide range of distressed situations.


By Phil Smith


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