06/10/2014 19:13 BST | Updated 06/12/2014 05:59 GMT

Falling Milk Prices and the Impact on British Dairy Farmers


Today the issue of milk prices has made it onto the BBC after press briefing from the NFU. We have been working extensively to make sure this issue is being tackled by processors, retailers, the food industry and politicians both at home and abroad and that it is highlighted in the media.

It is undoubtedly a very frustrating and worrying time for British dairy farmers. Milk prices are plummeting. With increased milk supply around the world and demand not increasing at the same pace, huge pressure has been put on milk values. For some it means they are now only getting around 25 pence-per-litre for their product. With the cost of production sitting much higher than this it is no wonder that many fear for the future of their farm businesses.

Understandably there is a strong feeling of concern amongst dairy farmers, with some feeling so exasperated they have decided that protesting is the only way forwards. We share their concerns.

What we also know is that it is clear that the British public want to back British farming and continue to support British dairy farmers during this difficult time.

Right now the dairy industry is anxiously watching the global markets for a sign of upturn. When that happens we must ensure that we are in a position to make the most of the situation. Milk prices must respond quickly and positively, with no delay.

Since 2012 the NFU has worked hard to work with farmers and processors to introduce the Voluntary Code of Practice. This has led to greater transparency and increased fairness of contracts and we must continue to build upon this. The extra security this offers has helped dairy farmers plan ahead and manage their businesses with more confidence.

I agree with our dairy board chairman, Rob Harrison, when he says that food businesses and retailers must pull their weight when it comes to delivering a sustainable milk price. We'd like to see more retailers take the lead of the likes of Tesco, Sainsbury's, M&S and Waitrose, whose pricing mechanisms give farmers some certainty over price. There are a number of opportunities for businesses in the supply chain to do more in liquid and cheese to support farmers and ensure transparent pricing systems. The NFU is making sure that retailers and the supply chain know what farmers expect of them. And we have taken the battle to the European Commission in Brussels to push for more action. This includes lobbying on the Common Agricultural Policy and bovine TB, to make sure our farmers have improved conditions in which to work in the market place.

But we are in a competitive and growing global market. The NFU's Chief Dairy Adviser, Rob Newbery, has analysed the current market and offers some important insight. He poses four questions that dairy farmers may want to consider to make sure they are competitive for years to come. Choosing the best milk supply contract to suit an individual's business is at the heart of this.

In the long term the dairy industry's future prospects look positive. Growth globally is still predicted to be around 2% per annum over the next 10 years. Costs of production, scale, efficiency and skill in the UK industry, mean that UK producers on average are still in a favourable competitive position, relative to others in Europe and the world.

But the competition is not sitting still. British farmers realise that to hold our ground, let alone grow our share of the market domestically and overseas, farmers in the UK will need to continually improve efficiency and quality of output, to stay ahead of the competition.

The NFU remains committed to fighting for functioning markets and fairer contracts ; this ultimately is the best way to achieve farm gate milk prices that fairly reflect the value of milk.