Union calls for better data on dairy prices
AFARMING union has called for better information on dairy prices and production levels as dairy farmers face the prospect of milk price cuts as 2018 begins.
NFU Cymru said dairy farmers across Wales would be concerned about price cuts that have been announced by some dairy processors, although other companies have said they would hold their prices for January.
Gareth Richards, chairman of NFU Cymru’s Milk Board, said: “What is extremely concerning and irresponsible at the moment is the unsubstantiated sentiment from various industry commentators, who have been talking the market – if we are not careful – into a new crash.
“Welsh dairy farmers have been through huge swings in dairy price volatility and we now, it seems, have commentators urging milk buyers to drop prices.
“NFU Cymru is continuing to call for better dairy market signals as milk price cuts, as recognised by the commentators themselves, don’t work, partly because the impact is too late and too slow in achieving its ultimate aim.
“We are therefore repeating our call on government, both at a UK and Welsh level, to ensure that market data is collected, audited and published to give dairy farmers the right signals as to what’s happening in the market – both on price discovery and demand. This is already done in other parts of the world, and should be the starting point for dairy risk management mechanisms in Wales and the UK.”
It follows the announcement by several dairy processors in the run up to Christmas they would drop prices paid to farmers in the new year, blaming falling global prices.
Meadow Foods, the UK’s largest independent dairy, said in December it would drop its ‘A’ milk price by 1.25ppl (pence per litre) to 29.75ppl.
Meadow Foods chief executive Mark Chantler said: “We regret the sudden and marked downturn in milk prices have required us to move our price to reflect these market conditions.
“We have however been working to ensure that we are now far better placed to manage a downturn, focusing on developing our sales to achieve more products sold into premium contracts.
“This should help reduce some of the effects of market volatility – however we will continue to monitor the situation very closely going into the New Year.”
Muller is cutting its price to farmers by 1.5ppl to 29ppl and Arla is bringing its price down by 1.3ppl to 31ppl.
Rob Hutchinson, Muller agriculture director, said: “Whilst we are disappointed to see this sharp decline, the extensive portfolio of added-value dairy products we make in the UK will shield farmers from the full volatility of global dairy commodity markets.
“We will continue to offer a stable and competitive milk price at each point in the market cycle.”
But farmer-owned First Milk is holding its prices for the moment, despite the market conditions. Jim Baird, farmer director and vicechairman of First Milk, said: “Dairy markets have weakened recently and so the outlook for the UK market continues to worsen.
“Whilst we cannot buck the markets, we will continue to work hard to reduce the impact of milk price reductions for our members as much as possible.
“We will do this through our focus on efficiency and quality, and by building on our strong, long-term relationships to deliver competitive returns to our members.”
Mr Richards added: “Up-to-date, accurate figures on price volume and demand are essential moving forward. Farmers having to base their future milk production plans on inaccurate or incomplete data or industry commentators, as there is no alternative, is extremely concerning and damaging to the industry, and we urge government to step up to ensure better transparency in the dairy markets.”