December 27, 2006

Low prices threaten UK dairy sector

Britain's farmers have said a growing shortfall between the prices they receive for milk and production costs was threatening the future of the dairy sector.

The National Farmers' Union (NFU) said dairy farmers were losing more than GBP 270 million (US$ 528.50 million) a year.

NFU Dairy Board chairman, Gwyn Jones pointed out farmers were losing on average about four pence (about eight US cents) per litre on milk supplied to processors, double the total at the start of this year with prices falling and production costs rising.

Some felt prices were low because many farmers continued to produce despite losing money.

The UK has lost 50 percent of its dairy farmers since 1992 and milk production earlier this year fell to a 12-year low.

Stuart Hampson, chairman of retailer, John Lewis Partnership, recently pointed out the UK might soon have to import milk. John Lewis is the parent of supermarket chain, Waitrose.

Jones wants the above to be taken as a wake-up call to the industry. The UK has already been importing organic milk, he said.

There was plenty of money in the supply chain, he said, adding it was just a question of sharing it out more equitably, he said.

NFU president Peter Kendall feels farmers need to work with retailers "to give them something to brag about". Local milk production could be promoted on environmental grounds such as less transportation.