Almost daily announcements of price cuts by processors and supply co-ops Farmer alarm over cuts Having seen average farm gate milk prices rise 14% in 2001, UK dairy farmers are becoming increasingly concerned at the almost daily announcements of price cuts by the dairy processors and supply co-operatives. Following the 1.95p/litre cut announced from April 1 by Dairy Crest (The Grocer, March 23, p27), Wiseman Dairies, for example, has announced a cut of 1.67p from April 1 to follow last month's cut of 0.6p/litre. Similar or even bigger reductions are expected soon from Express Dairies, Arla and the major supply co-ops such as First Milk, Milk Link and Zenith. The probability is looming that average milk prices will soon be back to the levels of two years ago, which led 7% of UK dairy farmers to quit milk production in 2000 and created the first major shortfall of UK milk output against the annual milk quota in the year to March 2001. In 2000, the annual average milk price fell from 18.4p to 16.9p/litre, with the claimed average costs of producing milk being around 20p/litre. In May, the peak month of milk output, the average UK price fell to 14.6p/litre, after seasonal adjustments, before recovering by 22% to 17.9p/litre last year. One reason for the dramatic recovery was the initiative by a number of multiple retailers in October 2000 and April 2001 who offered to pay more for their liquid milk supplies provided this was passed back to dairy farmers. There is no indication of any such initiative this year and many farmers fear a repetition of 2000 price levels will drive many out of milk production and create both a shortage next winter and another shortfall of output against milk quota. {{CANNED GOODS }}

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