The Tenant Farmers Association has called on all dairy companies
to share the benefits of improved milk prices with their suppliers.
Speaking at the Great Yorkshire Show in Harrogate, TFA National
Chairman Reg Haydon said “In recent times we have seen
significant increases in prices for milk and milk products on
world markets. Since the beginning of the year prices for both
butter and skim milk powder have increased by 40 per cent to £2300
per tonne and £2150 per tonne respectively. Cheddar prices
have also increased by 20 per cent over the same period to £2250
per tonne1. However prices to dairy farmers have been small by
comparison and are only just beginning to register. Some of my
members are still having to cope with milk prices at 18p per
litre and below which is unsustainable”.
Dairy farmers have been particularly hard hit by low profitability
due to low milk prices and many have been forced out of business.
Investment decisions have been put on hold even though new legislation
for Nitrate Vulnerable Zones and compliance with the EU’s
Water Framework Directive will mean that many businesses will
have to consider erecting new slurry stores and installing new
dirty water systems.
“With every second dairy farmer being centred on a tenanted
holding, these investment decisions can only be based on a strong
business case. Tenants do not have the value of the farms to
rely upon when borrowing money. If we want to sustain a dairy
industry long-term then we must ensure that farmers receive a
fair price for their milk,” said Mr Haydon.
“Of course the farming press has been full of stories in
recent times of individual supermarkets and milk purchasers seemingly
offering better deals to their milk suppliers. However, upon
closer inspection these are not always as beneficial as they
first appear. This is either because the price increase does
not apply across the entire milk output of the producer or because
costs are added through insistence on changes to the way the
milk is produced. I am concerned that this will lead to a tendency
to set one producer against another which is something we need
to avoid,” said Mr Haydon.
“We must also look at the development of more flexible
contracts for milk supply. Currently most milk producers are
tied into contracts which require them to give at least 12 months
notice of termination. That is not good for competition and leaves
producers in a weak negotiating position when prices rise as
they have done in recent times,” said Mr Haydon.
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