August 17, 2011

Welsh milk producers cannot keep pace with soaring costs

Welsh dairy farmers are facing a long and unprofitable winter due to huge inflation in the cost of feed, fuel and fertiliser.

Latest figures from DairyCo show that intensive energy dairy rations are up 28% on this time last year, low energy rations are up 33% and protein rations are up nearly 20%.

Add the costs of conserving home grown forage, ammonium nitrate prices 50% up on this time last year, blends on average 30% higher and agricultural fuel up by nearly 25% and the outlook looks bleak for farmers with Europe's lowest farmgate price for milk.

Pembrokeshire NFU Cymru county chairman - and dairy farmer - David James said, "Despite these huge increases in our costs over the past year, the milk price on average has only moved by around 11% in the same period. What makes it all the more annoying is that based on market conditions we should be receiving around 32-33p a litre for our milk rather than the UK farmgate average of 26.61p/litre. This price based purely on what the market can and should be paying producers for their milk is the difference between profit and loss."

James said the winter looked long and unprofitable unless producers were paid a sustainable price.

"The European Commission High Level Group, the Commons Efra select committee and a recent DairyCo report on asymmetric price transmission in the dairy supply chain all pinpoint the weak position of farmers which can only be addressed by improving our negotiating and bargaining power," he said. "The evidence overwhelmingly points to a need to build in fair and equitable trading conditions for farmers within the supply chain."

James said farmers wanted to see the European Commission's Dairy Package, with new rules on contracts and fixed prices, fully implemented. "That is a crucial starting point to help us address the failure of the market place to deliver a fair return for Welsh dairy farmers," he said.