Farmer’s union says farmgate milk price must increase for production to remain viable

The Farmers’ Union of Wales’ Milk and Dairy Produce Committee has agreed unanimously that farmgate milk prices need to rise significantly if production is to be viable.

The committee says that the price rises are needed to reflect the increase in feed, fuel, fertiliser and energy costs, many of which are linked to the war in Ukraine.

The committee noted a recent Agriculture and Horticulture Development Board (AHDB) forecast that the total milk produced across Great Britain could be down by as much as 649 million litres as a result of the pressures on the industry.

A dairy consultancy, Kite Consulting has predicted that milk processors will need to pay upwards of 50 pence per litre if they wish to reverse the decline in milk production, despite average UK farmgate prices already trending at around 20 per cent higher than last year.

While some producers are now receiving upwards of 40 pence per litre for their milk, one committee delegate had calculated that the cost of feed concentrates alone had doubled to the equivalent of 8 pence per litre, with others reporting similar figures.

Long-term viablility

Speaking after the committee meeting, FUW Milk and Dairy Produce Committee Chairman Dei Davies said: “The Union recently wrote to the major retailers urging them to ensure that rising input costs do not threaten the long-term viability of food producers in Wales and the UK, and that farmers are paid a fair price for their produce in light of developing circumstances.

“Increases in UK food prices are inevitable, and while retailers do have a part to play, we must ensure that this is reflected throughout the supply chain and reaches the farm gate.”

“It was clear during the discussion that these predictions are in fact already becoming a reality for many of our dairy farmers.”

“This is without taking into account many-fold increases in fertiliser, fuel and labour costs that will increasingly have an impact on production as the year progresses.”

The committee expressed the urgent need for all those in the supply chain to recognise the impacts rising input costs are having on the short- and long-term sustainability of milk production in Wales.

“We are therefore urging milk processors, supermarkets and all others involved in the supply chain to recognise the extent to which input costs have increased over such a short period of time, and how these are impacting on farm costs and will impact on milk production later in the year, and to take action to ensure that the price paid for milk at the farmgate fully reflects this before businesses become even more adversely impacted.”