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Milk price: partial good news, maybe.

by Rod Kebble

Following the recent announcement, reported on this site, that the price of milk paid to UK dairy farmers would be cut by between 1½p and 2p per litre from 1st June, there now comes some partial good news.

Partial, because it applies only to the 1,600 farmers (including Pierrepont Farm’s Bev & Mike Clear) who are members of the farmer-owned milk processor, Milk Link.

Full details are here, but the main point is that a merger is proposed between Milk Link and Arla Europe amba, a milk processor owned by Danish, Swedish and German dairy farmers. Should the merger take place, it is said that — in a year or two — Milk Link’s UK dairy farmers might well enjoy the higher prices for milk achieved by Continental farmers.

The merger is dependent on (a) there being a two-thirds majority in favour when Milk Link’s members vote on 26th June, (b) a vote by Arla Europe’s Board of Representatives and (c) regulatory approval.

The UK government’s view of the situation for British dairy farmers is set out in a reply, dated 24th May, from the Rt Hon Jim Paice MP, Minister of State for Agriculture and Food, to an email sent by my MP, Zac Goldsmith, after I had contacted him about the cut in payments to farmers:

“Thank you for your email of 13 May to the Secretary of State about the UK dairy industry. I am replying on behalf of Caroline Spelman as the Minister responsible for this policy area.

“The Government wants to see a profitable, thriving and competitive dairy sector and the cuts in milk prices announced in the past few weeks are clearly very bad news for those farmers affected. As the NFU [National Farmers Union] are aware, I supported the introduction of the EU dairy package. Producer Organisations provide a good opportunity for farmers to come together and improve their bargaining power. The EU legislation also allows Member States to decide if contracts should be made compulsory within their own territory. In the summer, Defra will consult on this option.

“However, I am still in favour of a robust voluntary code of contractual good practice that will secure better and clearer contractual conditions and therefore improve the balance of power. Compared with a regulatory approach, a voluntary code could be in place more quickly and keep the industry in control. The code could also deal with more of the issues which are critical to farmers, which the reguations cannot deal with, such as notice periods and exclusivity.

“I will continue to do all I can to actively encourage a different and better approach to milk contracts.”

A one pint (568ml) bottle of milk.