Last week this column noted how life is rarely dull in dairy. And we got another demonstration today of how quickly things can change in the sector.
NFU dairy board chairman Mansel Raymond knows it better than most.
Just last week, Raymond was writing in The Grocer’s Saturday Essay about the impact on farmers of Dairy Crest’s decision to close two of its dairies. While sympathising with the farmers affected by the news, he recognised the tough commercial realities in the sector - and said he had faith the dairy giant was “doing the right thing for its remaining staff, shareholders and farmers’ futures”.
Today that faith was put to the test. In a strongly worded statement on the NFU’s website, Raymond called Dairy Crest’s latest bombshell - a 2ppl cut in the price of milk it pays to farmers, with just four days’ notice - “outrageous” and “sheer exploitation”.
“How can any farmer run a business faced with cuts of this degree and immediacy?” he asked.
“It is clear from its recent trading statement that Dairy Crest finds itself in a challenging position in the marketplace - a position where it seems unable to get a fair market value for fresh milk from its customers. But this is no excuse for paying a farm gate milk price which is 3-4ppl below the costs of production.
“This only reinforces the need for balanced and fair milk contracts. Farmers supplying Dairy Crest liquid contracts are now forced to accept a price cut they have not agreed to, for at least the 12-month notice on their contract.
“This is sheer exploitation and the clearest demonstration yet that those dairy contracts, where buyers have the discretion to change price without mutual consent, must have break clauses which allow farmers to leave earlier.”
No wonder he assured readers of The Grocer that dairy farmers would not be “resting on their laurels”. He’s discovered first-hand how quickly the rug can be pulled out from under you.
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