UK: Milk processor Dairy Crest under fire for rises as farm gate prices fall
A MILK processor has come under fire from angry farmers for putting up what it charges its customers while cutting farm gate prices.
Dairy Crest has written to retailers informing them of a series of price rises, including a 4 pence a litre increase in the price of milk from July 29.
In its letter, it blames “continued price inflation in the commodities and food markets” for the rises.
Farmers’ leaders condemned the move as they battle for a reversal of a series of UK farm gate price cuts by the major processors, including Dairy Crest.
National Farmers’ Union (NFU) policy adviser Alex Butler-Zagni, who is based in Newmarket, said: “Dairy farmers will be appalled that Dairy Crest is increasing the price it charges customers for milk by 4p a litre, just days before reducing the price it pays farmers by nearly 2p
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“The commodities market remains difficult and the cost pressures continue, as Dairy Crest points out in its letter to customers.
“However, it seems a perverse solution to respond with cuts that will threaten the businesses of the very people the company relies on.
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“Like Dairy Crest, dairy farmers need to make a profit to survive. They cannot stay in dairying if they are making a loss on every litre of milk they produce. That will be the situation come August 1 if these price cuts are not reversed.”
Chairman of Dairy Crest Direct David Herdman said: “This latest 1.65ppl cut to our members, which comes on top of a 2.0ppl cut in May, will deliver a completely unsustainable milk price. In fact we estimate the deficit between milk price and production cost to be �53,000 a year for our liquid suppliers.”
Dairy Crest announced this week that it would be reducing notice periods on milk supply contracts to three months in response to farmers’ concerns. It has introduced a ‘price floor’ guaranteering prices paid to farmers will not be cut further this year.
“We fully understand the difficulties our farmers face and we have been working with their representatives at DCD Dairy Crest Direc to explore what we can do to further improve our milk contracts.”
At its annual general meeting on Tuesday, Dairy Crest said its overall trading in the first quarter had been “challenging” and that lower returns from commodity cream markets which had led to the farm gate price cuts.
“Regrettably, these cuts have put pressure on our supplying farmers,” it said.
It is hoping to sell its French spreads business, St Hubert, and reduce its debt.