March 15, 2011

 

Low-cost milk threaten UK farmers' businesses

 

 

UK dairy farmers fear they could be forced out of business by a supermarket price war that has driven the cost of a pint of milk down to less than the price of a bottle of water.

 

With bargain stores such as Aldi and Lidl selling milk at 22p per pint, the dairy farmers say they are making a loss on every litre their herds provide.

 

At Farmfoods, a two litre carton of milk sells at GBP1 (US$1.62) each, or two for GBP1.60 (US$2.59), which is 23p a pint.

 

Tesco and Asda also offer deals to customers who buy two four-pint cartons, which work out at 25p per pint.

 

A litre, 1.75 pints, of still water in supermarkets costs 81p. The price war has angered the Scottish farmers' union, who say 50 farms went out of business last year, and with more facing closure, the industry is facing its worst crisis for years.

 

Kenneth Campbell, chairman of NFU Scotland's milk committee, said that dairy farmers are not expecting customers to be landed with huge increases in the cost of milk, a necessity in households, but says the farming industry is entitled to a fair price for the milk it produces.

 

"We're not asking customers to pay any more for milk. All we're asking for is a fair slice of the cake. The supermarkets have huge profit margins, yet farmers are the ones who suffer," Campbell, who is demanding a better deal for dairy farmers, said.

 

"We should have a flourishing dairy industry in Scotland, because we have the skills base and the climate. But we don't, and the business is stagnant. Farmers have faced a massive increase in costs of animal feed, diesel and fertiliser," Campbell added.

 

"They are working at a loss, and can't possibly afford to invest. It's a case of keep your head down and hope that things get better. It's pretty appalling with the production costs that milk is now being sold for less than bottled water. The milk processors and the supermarkets have a part to play in that. They are the ones who are responsible, and it is the dairy farmers who are suffering as a result," stated Campbell.

 

A spokesman for Tesco said, "Against a backdrop of volatility in the marketplace over the past months and recent weeks, we are committed to base the price paid to our dairy farmers on the cost of production. All we're asking for is a fair price."

 

Farmers say they are losing money because supermarkets sell their milk so cheaply.