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Dairy giant First Milk delays farm payments following crash in milk price

PUBLISHED: 09:50 12 January 2015 | UPDATED: 09:50 12 January 2015

Sir Jim Paice, south east Cambridgeshire MP and chairman of First Milk

Sir Jim Paice, south east Cambridgeshire MP and chairman of First Milk

Archant

The UK’s largest dairy company has withheld payments to its farmers following a crash in the price of milk, its chairman said.

First Milk, a co-operative owned by British farmers, said 2014 was a “year of volatility that has never been seen before” in the global dairy industry.

Its chairman, Conservative MP Sir Jim Paice, said it will delay today’s payments to farmers by two weeks and all subsequent payments by a fortnight.

In a statement he said: “We understand that the milk payment deferral will cause concern for members as direct debits and payments will have been lined up against milk cheques.

“On that basis, we are working with all major banks at national, regional and local levels to explain the rationale around this decision. That way, bank managers should be well equipped for any conversations they have with First Milk members.

“We are a business owned by dairy farmers. The board are acutely aware of the difficulties this current extreme volatility is causing First Milk members and the UK dairy industry.

“We don’t know how long this current market downturn will last, and we are aware that hundreds of UK dairy farmers are unlikely to find a home for their milk this spring.

“Our priority is to make the business and our processing assets as secure as possible in order that we can continue to process and market every litre of our members’ milk.”

He added that the move will put the business on a “stronger platform” ahead of the spring.

Returns from globally traded dairy products have fallen by more than 50% in the past 12 months, leading to a steep fall in milk prices around the world.

Last year the chief dairy adviser to National Farmers’ Union warned that the cost of production outstripped the price farmers were receiving for milk.

National Farmers’ Union president Meurig Raymond warned that dairy farmers were “haemorrhaging money” and called for supermarkets to do more to back British suppliers.

He told the BBC Radio 4 Today programme: “This is only a symptom of what has happened in the milk industry over the last number of months. We have seen the product devalued - liquid milk in particular is now cheaper than water ... There are very few dairy farmers making any money, most are haemorrhaging money at this present time, particularly those at 20p a litre.

“You have got processors not making any money.”

He added: “Dairy farming is seen as nearly iconic in the British countryside. We have lost 60 dairy producers in December alone ... we have halved the number of dairy farmers in the last 10 years.”

In a message to retailers he added: “Back dairy farming at this time, otherwise we are going to be importing a lot more milk in the future.”

David Handley, chairman of lobby group Farmers For Action, told Today: “We have got to try and turn this industry around. Dairy farming in the UK has gone through 10 years of turmoil and it’s got to change. We have all got to change.”

He added: “Most dairy farmers in this country have lowered costs to a point now that they can’t lower them any more. We have got a fantastic product, the consumer ... wants to buy it.

“Why are we allowing retailers to discount it, purely and simply - and evidence has come directly out of their mouths - to get people into their stores? That should not be happening to any industry, whether you are producing a radio, a litre of milk or a bottle of water.”

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