NFUS warns processors not to cut milk prices

Producers have been enjoying higher prices over the past six months following a “belated” response from processors to increased global commodity prices but the union claims ex-farm prices are still 3p per litre short of what dairy farmers should be receiving.

“The milk price rises seen in the last six months must provide a platform for further price improvements in 2012,” said milk policy manager, George Jamieson. “Continued market strength suggests that there is every justification for further price increases to dairy farmers in the New Year.”

Jamieson said it was a “huge disappointment” that some liquid milk processors were already looking to use a slight weakening in global and UK commodity values as justification for talking down the milk price.

“We should be building on the huge positives that exist in the market for milk and dairy products,” he said. “Some commodity prices have weakened but from a very high level. Already there are signs that the global situation has stabilised. Milk powder and cheddar prices are stable and although butter and cream prices have fallen, they remain at levels substantially above those seen 18 months ago.”

“Plenty of scope exists for further price rises and while we can sympathise with liquid processors over the damaging pressure that retailers are placing on them, we are adamant that producers must not be used as the safety valve once again,” Jamieson warned.

The two leading milk marketing co-ops, First Milk and Milk Link, have recently made significant commitments to their members. First Milk will be paying out a dividend of 3 per cent on share capital – the third in 18 months and worth £1,800 to the average producer – next month and Milk Link has committed to at least maintain its current prices until next April.