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Minister has milk talks with supermarkets

06:30 26 July 2012

Farmers want supermarkets to pay a fair price for milk.

Farmers want supermarkets to pay a fair price for milk.

FARMING minister Jim Paice held talks with supermarket chiefs in Westminster last night to pressure them into giving a better deal to dairy farmers.

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The discussions follow recent protests which saw some 2,500 farmers descend on London to decry cuts to the price they are paid for milk, which they claim are forcing them to the edge of bankruptcy.

Both supermarkets, who buy farmers’ milk to sell in stores, and food manufacturers, who purchase it to make into dairy products, have been making the cuts.

Earlier this week Mr Paice chaired a meeting between dairy farmers and food manufacturers at which an outline ‘code of practice’ was agreed which should put milk producers in a stronger position to avoid future cuts.

After yesterday’s talks with the supermarkets, Mr Paice said: “We’ve now brokered an agreement which, once finalised, will make contracts between farmers and milk processors fairer and more transparent.

“But we need real changes across the industry because as things stand dairy farmers are going to seriously struggle in the future.

“That’s why I have been sitting down with retailers and manufacturers to emphasise just how crucial it is to take a more long term approach.”

Mr Paice explained that in a series of one-on-one discussions with representatives of supermarkets, which included Iceland and Morrisons, he spoke about the efficiency of the dairy supply chain, pricing mechanisms and the factors retailers take into account in deciding where they source dairy products.

Meanwhile the minister has also said he now wants to explore the idea of handing a new ‘supermarket watchdog’ the power to sanction big stores if they treat dairy farmers unfairly.

The situation has been exacerbated by a price war raging between supermarkets which has seen them offering milk to shoppers at ever dwindling shelf prices - most recently several have been selling it at four pints for a pound.

But farmers say instead of absorbing the loss, supermarkets instead use their strong market position to demand ever cheaper prices from milk producers.

Progress has been made recently. Last week Asda, the Co-op, Aldi and Morrisons agreed to raise the premiums they pay farmers from August.

Meanwhile on Tuesday, Asda announced another rise, saying it would pay an extra 2p per litre from August until the end of the year.

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