Last week, the National Farmers' Union launched a new report, 'The Great Milk Robbery', in which it claimed that dairy processors had made millions of pounds more in revenue from dairy commodities this year, which they were not passing down to farmers.
Following the report, dairy co-operatives First Milk and Milk Link both announced milk price increases for their farmer members. Omsco also said it would make an additional payment of £1,900 per farm to its 400 members.
Despite the increases, processors have warned farmers against taking an over-simplistic view of the many diverse factors that underlie the milk pricing mechanism. Milk pricing was a complex issue linked to commercial factors such as the world market for dairy commodities, production volumes, consumer demand and the competitive environment, said Jim Begg, director general of Dairy UK. "The dairy supply chain doesn't exist in a vacuum that allows its individual elements to make pricing decisions out of step with the markets."
Begg also criticised the NFU for failing to address consumer issues at all in their report. In reality, the main drivers determining farmgate milk prices were competitive positioning between processors and the availability of milk, added a spokesman for Robert Wiseman Dairies. "We are looking at farmgate milk prices at the moment with a view to increasing them from 1 July this year. Any rise is yet to be determined but we can't be putting ourselves at a competitive disadvantage."
The NFU made its call for better farmgate milk prices less than a month after Robert Wiseman posted a 59.9% surge in annual pre-tax profits to £49.2m, and Dairy Crest announced a 5% increase to £83.5m. Both companies cited higher cream prices as one of the reasons for their strong performances.