Norfolk dairy farmers furious at surprise milk price cut
A milk-price cut of almost 10pc with just four days' notice has infuriated farmers' leader Peter Kendall.
The National Farmers' Union condemned Dairy Crest's price cut to farmers supplying into its non-aligned liquid contracts.
Dairy board chairman Mansel Raymond said the decision to slash the price paid to its producers by 2p per litre (ppl) with a mere four days' notice was outrageous.
A leading Norfolk producer, Ken Proctor, who is vice-chairman of Norfolk NFU and member of the national dairy board, said that the price cut would hit many smaller producers very hard.
'I just hope that we don't get everybody following suit,' he added.
With the pressures on the industry, he said that his family business has spent �400,000 on complying with new nitrate vulnerable zone regulations. Mr Proctor, who runs the Airfield pedigree Holstein herd, said the more and more legislation was adding to the costs of staying in business.
'We're spending continuously and we've got more in the pipeline,' he added.
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With the industry average cost of production about 30p per litre, this latest cut to about 26p per litre will put producers under great pressure.
Mr Proctor, who is a former president of Europe's largest breed society, Holstein UK, said that herd sizes were already increasing at a rapid rate. 'There are a lot of 1,000 cow units. If we are going to have lower prices and below the cost of production then economy of scale will eventually take over.'
While a number of herds have gone from Norfolk, he said that total production had only dropped by 10m litres in the past five years from 70m to about 60m litres. 'So a lot of the milk is still here and we're not a complete wasteland as far as milk production is concerned.'
Welsh farmer Mr Raymond, who is the twin of Meurig, the deputy NFU president, said: 'How can any farmer run a business faced with cuts of this degree and immediacy?
It is clear from its recent trading statement that Dairy Crest finds itself in a challenging position in the market place, a position where it seems unable to get a fair market value for fresh milk from its customers.
'But this is no excuse for paying a farm gate milk price which is 3-4ppl below the costs of production,' he added. 'This only reinforces the need for balanced and fair milk contracts. Farmers supplying Dairy Crest liquid contracts are now forced to accept a price cut they have not agreed to, for at least the 12-month notice on their contract.
'This is sheer exploitation and the clearest demonstration yet that those dairy contracts, where buyers have the discretion to change price without mutual consent, must have break clauses which allow farmers to leave earlier.'
NFU president Mr Kendall also condemned the decision and will urge farming minister Jim Paice to take action over unfair milk contracts. He said: 'The exploitative position farmers find themselves in will continue to be used against them by milk buyers unless we see either a robust code of practice or legislation put into operation very soon.
'I will be calling on Jim Paice to ensure the days when milk processors can treat farmers in this way are put behind us. The basic component of a contract is certainty. With a 2ppl price cut at four days' notice, Dairy Crest has demonstrated that its contract with farmers is fundamentally a bad one.'
n Mr Proctor, who attended the dispersal sale of the 400-head Terling herd, said that it had been sad. 'It was the end of 130 years of cattle breeding and 103 years of registering (pedigree) cattle.'
Lord Rayleighs Farms, of Terling, Chelmsford, had been one of the earliest importers of original black and white Friesians/Holsteins into Britain. Several bulls, which were imported just three days before the outbreak of the first world war in 1914, laid the foundations of several great Norfolk pedigree dairy herds.
n Another leading Norfolk dairy farm in the heart of Broadland, Louis and Fran Baugh's 350-head Neatishall herd goes under the auctioneer's hammer on Tuesday, May 29 at Wright Manley's Beeston sale centre.