The report by the environment, food and rural affairs (EFRA) select committee said around 18p a litre went missing between the farm and retailer.
The committee said the missing money was being swallowed up by the dairy processors’ costs and called on them to justify to farmers why they needed such a large chunk of the retail price to meet their costs.
The missing money is a symptom of the wider atmosphere of suspicion and mistrust in the dairy sector. The committee recommended improved co-operation and dialogue across the entire supply chain and that the government should take steps to improve transparency.
This view was echoed by the National Farmers’ Union which welcomed the report. “The missing 18p is part of the lack of transparency. There needs to be greater co-operation, both vertically
and horizontally across the chain. We need to be working to try and bring everyone together.”
Jim Begg, director general of the Dairy Industry Association, said:“There is much misunderstanding about how the dairy markets work, and there is responsibility on everyone to improve communications and understanding.”