April 25, 2006

Britain swamped by milk

Low milk prices are cutting into the bottomline and would not allow farmers to make enough profits for re-investment, Tim Smith, chief executive of Arla Foods said at the opening of a facility in Lockerbie on Monday (Apr 24).

Arla Foods, the UK's largest dairy company, handles more than 2.2 billion litres of milk annually.

Britions are not buying enough dairy products to meet UK dairy farmers' annual quota of 14 billion litres of milk, Smith said, adding that there is too much milk being produced in the UK in relation to the market.

The company said it is at the top end of the price bracket but co-ops at the bottom end of the price scale would be the ones suffering the most.

The media present also grilled Alistair Darling, the secretary of state for Scotland, who was at the opening. Questions were directed with regards to the wide gap between the price farmers receive for their milk and retail prices. Reporters also asked how the government intends to address the power supermarkets wields over suppliers at farm level.

Darling replied that the supermarkets want to supply their customers at the lowest possible price, but there has to be a balance.

In most industries there is a negotiation between suppliers and their customers and farming is no exception, he said.

Darling urged those concerned to await the rulings of the office of Fair Trading concerning the powers of the supermarkets.