The agricultural industry makes a significant contribution to the Welsh economy and its employees deserve to be treated with fairness and respect. Yet unless urgent action is taken to tackle the cut in the cost of milk, the Welsh dairy industry will face a crisis that will drive farmers out of business and leave consumers facing a rise in shelf prices.
Plaid having long campaigned for a Supermarket Ombudsman welcomed the Chancellor's announcement that a Milk and Groceries Ombudsman would be established following the recent Budget. Yet many people (and Plaid included) have real concerns that the proposals will fail to give the Ombudsman any real teeth to ensure a good deal for farmers.
The proposed cut of two pence per litre of milk due to be introduced in August would leave farmers at a loss, paying more to produce milk than to sell it. This is wholly unsustainable and threatens one of the Welsh economy's most valuable assets. Any Supermarket of Milk and Groceries Ombudsman needs to take a serious look at the dairy industry and put itself squarely on the side of farmers against supermarkets and their shareholders.
Before the last Westminster General election in May 2010 there was much talk (even from the Conservatives) of the need for a Supermarket (and even a Milk) Ombudsman, when there was a pressing need for votes, since then there has been relative silence from Westminster, save for the Chancellors budget mutterings. The Supermarkets having purchased their tame politicos in the Westminster village (well before the Political Parties and Referendum Act 2000 came in) would be quite happy with a weak Ombudsman, who’s pronouncements they can ignore continue to aggressively pursue ever greater shares of the profit with minimal regulation.
At present one litre carton of full-fat, non-organic milk can cost around 65p (01.02.2012 figures). From this a farmer got between 21p and 28p. Production costs come in at around 28p. No wonder that over the last ten years two thirds of dairy farmers in England and Wales have gone out of business, that it is estimated works out as one dairy farmer leaving the industry every day.
The situation has not got any easier for the farmers or the consumers, especially as we now have to factor in increased transport and production (fuel) costs. When it comes to a fair deal the current milk prices make grim reading as widespread promotions continue to be offered on liquid milk by the usual suspects. Supermarkets are also widely offering branded and organic milk on promotion – guess who takes the hit for cost cutting – the farmers!
The most recent DEFRA figures, show that the average UK farmgate price stood at 26.98ppl in May 2012 (it was 29.27ppl at the end of January 2012 and 29.38ppl in November 2011). The May figure showed a 0.85ppl (3.0%) decrease on the April average price. Annual comparisons show a 0.6ppl (2.3%) increase year on year. The GB average price was 27.97ppl in May, a 0.49ppl (1.7%) decrease on the previous month and an increase of 1.46ppl (5.5%) compared with May 2011. The Northern Ireland (NI) average for April fell to 21.99ppl, a decrease of 3.00ppl (12.0%) compared with April and 3.74ppl (14.5%) less than the previous year.
We are in the process of losing a critical mass of milk suppliers (something the NFU is only too aware of) and we have reached the point where UK farmers are no longer in a position where they can supply the UK's “core milk requirement” around 13 billion litres per year (2010 figures). In 2009 / 2010 year there was a 15 percent drop in UK Milk prices. If you look at the wholesale prices e.g. Butter, Cheese, Cream, etc the situation is no better.
Over the last 10 years that Supermarkets’ margins (e.g. the amount of the price they take) on milk have doubled. Now with a trend for both the processor and retailer to be the same, we have a situation where they take over three quarters of the price of a pint. We have now reached the situation where in a land once renowned for Dairy farming and with cheap milk, we are becoming a net importer of milk.
We (as customers and consumers ) also some of the blame because we let this happen, if we want quality milk and dairy products (that are produced in these islands from UK milk) then we will have to change the way we buy, if we do that then out farmers will get a better deal. There is little point in hoping that the Con Dem Government (or a future New Labour one) will get its act together because they just won't.