Pressure mounts for producer milk price increases

DESPITE mounting pressure from farming unions, most major milk processors appear reluctant to lift their producer prices - for now.

But there is acknowledgement the market is definitely moving upwards, driven not least by rising commodity auctions and, as far as the UK is concerned, a decidedly modest ‘spring flush’.

While plenty of fingers are being pointed at the retail sector, Asda has stuck to its pledge and shared the cost savings of its supplier base rationalisation a few weeks ago, with its 300 or so remaining Asda DairyLink producers. From May 1, they get another 0.25ppl, boosting their ‘premium’ over Arla’s standard 24ppl, to 1.25ppl.

This week, new NFU dairy board chairman Mansel Raymond used his first speech to NFU council to hammer home the rationale for a ‘long over-due price rise’.

Scotland

North of the border, NFU Scotland claims an immediate milk price increase is wholly justified and the union has been in dialogue with milk purchasers.

“Our assessment of the current market conditions is that there is no reason for milk prices to remain static,” said NFUS milk committee chairman Jimmy Mitchell.

However, it looks as though none of the big processors wants to make the first move. Robert Wiseman Dairies says it already pays a price that is competitive within the current market.

“In many cases we are 2ppl higher than other milk buyers and in excess of our peer group competitors. We will continue to pay a price necessary to secure the milk we need but not a price that is unrelated to the rest of the market,” said a spokesman. And he pointed out while the prices of some dairy commodities were on the increase, so were the prices of other commodities like oil and packaging which all impacted on milk processors’ businesses.

Dairy Crest, too, says the markets to which it is exposed do not warrant any upward price move at present.

“We have had our price negotiations and the answer is no,” said milk procurement director Mark Taylor. He said he found it disappointing the NFU dairy board chairman had chosen milk price as the subject of his first address when there were ‘so many other positives he could have addressed’.

Arla said markets were reviewed on an on-going basis, but there was ‘nothing to report at the moment’. Arla Foods Milk Partnership

chairman Jonathan Ovens, however, said it was encouraging the way the markets were moving and he was quite optimistic (for price prospects) longer term.

Positives

There was some positive news from First Milk for those producers who lost out on small increases to some farmers from April 1. A 0.25ppl increase on standard litre prices goes to those in Highlands and Islands milk pools - whose price was reduced by 0.35ppl from April 1 - and to ‘cheese and balancing’ producers whose price had remained unchanged.

A major supplier to the food ingredients market, Meadow Foods, has confirmed no price increase next month but executive chairman Simon Chantler said he was optimistic of better prices this summer.

“There is certainly enough pressure in the marketplace,” he said.

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