Blow to dairy farmers caused 'irreparable damage'

Dairy farmers suffered a major blow to their confidence with the decision by some processors to cut payments for milk, it has been claimed.

The move did "irreparable damage" to their feelgood factor, a leading industry commentator said, as dairy farmers from all over the UK attended the Dairy Show in Somerset.

Nick Holt-Martyn, of the Taunton-based consultancy The Dairy Group, said the fall in confidence pervaded all milk suppliers, and he blamed the big processing dairies for sacrificing payments to suppliers in the summer to gain market advantage. Farmers, concerned they were losing cash with every drop of milk they produced, picketed four large dairies up and down the country and farmer organisations formed The Dairy Coalition to orchestrate a high profile campaign.

A promised Code of Practice emerged, as the processors backed down, dropped the proposed cuts, and undertook to restore cash slashed from their farmers' payments earlier in the year.

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But, said Mr Holt-Martyn: "Despite the sudden turnaround, with companies promising to pay 29.5p per litre, the outcome is that producers have no confidence that processors will deliver a cost-of-production price, or will continue to pay a sustainable price going into the future."

With rising fuel prices and spiralling feed costs, caused by a very poor harvest and shortages world wide, the new payments only restored the situation which existed back in July, he said. He warned that farm-gate milk payments needed to rise by 10% in January to ensure there was sufficient production in April.

Seven thousand of England's 11,000 dairy farmers attended The Dairy Show at Shepton Mallet yesterday. Rob Harrison, chairman of the South West Dairy Board said: "Things are looking a lot better for dairy farmers than they were, and we now have a real opportunity to put the industry on a sustainable footing for the future.

"But although we have made considerable progress we must continue to work together to translate these promising signs into tangible, realistic, farm-gate payment rises, which reflect what it costs to produce milk, so dairy farmers will have the confidence to reinvest for a long term future in the industry."