Dairy farmers losing out as supermarkets’ profits increase
When it comes to making profits in the dairy industry, farmers are the biggest losers, and retailers are the only winner, the NFU said today.
October 7, 2010 When it comes to making profits in the dairy industry, farmers are the biggest losers and retailers are the only winner, the NFU said today. DairyCo’s annual dairy supply chain margins report on gross margins for retailers, processors and farmers, published this week, shows supermarkets are making growing profits from milk and dairy products. Sadly, the majority of dairy farmers continue to receive a price for their milk that sits well below the true cost of production. Over the 2009/10 milk year, the farmgate price dropped by two pence per litre (2ppl) compared to the previous year. Retail gross margins for both increased over the same period. NFU dairy board chairman Mansel Raymond said: “These latest figures are a complete vindication of the NFU’s Great Milk Robbery report. As ever, dairy farmers are the big losers and are yet to see their fair share of better market returns. “During 2009/10 retailers were able to grow their margins at the expense of processors and farmers, who both suffered a fall in gross margins, and despite there being no increase in prices to consumers. He explained: “The lack of an increase in dairy producers’ prices also backs up the NFU’s Great Milk Robbery report. This report suggested that money which should be returned to dairy farmers has been used to compete for retail business. The level of promotional activity in the liquid milk and cheese sectors has taken value out of the supply chain for everyone but the retailers. “This adds further weight to the argument that farmers should not be forced to pay the price of ruthless milk promotions, and perhaps indicates a market correction of inflated retail shelf prices,” said Mr Raymond. The publication of DairyCo’s report is timely given the challenging questions posed by the NFU president, Peter Kendall, to the major buyers and retailers at this year’s Dairy Event. The NFU is awaiting responses and will be considering the answers against the information in the DairyCo report. It will also add weight to the WI Great Milk Debates in November, which will seek to challenge retailers and milk buyers on their activities, emphasising the need for greater supply chain responsibility and transparency. Mr Raymond added: “Finally, despite the slight milk price increases farmers have received since June there is a definite lag which DairyCo highlights in detail in this report. There is certainly more money to come to farmers. The questions are ‘why has it taken so long’ and ‘will farmers get their fair share’?” Notes To Editors: If you wish to interview an NFU representative in the dairy industry, please contact NFU SE PR Officer Isobel Bretherton Tel: 01730 711956/07778 002617. NFU South East dairy adviser James Mulleneux is on: 07968 321726. • The average retail price for liquid milk in multiple retailers remained stable in the 2009/10 year at 65.1ppl compared to the average of 64.9ppl the previous year. • The gap between AMPE and farmgate price is currently the largest it has been for almost three years although with recent increases in milk prices, this gap has narrowed slightly.
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