Dairy farmers facing undersupply penalties

The letter, seen by Farmers Guardian, said if the non-standard litre price was in excess of the standard litre price ‘those farms who are producing below their agreed weekly litres may be penalised’ and requested ‘urgent action’ to address undersupply.

As reported in recent weeks, falling milk production across Europe has seen supply and demand start to level out.

Farmers took to social media to express their dismay with Freshways’ decision.

Phil Elkins, a farm vet from Kernow, wrote on Twitter: “Make less milk, make less milk, make less milk; you didn’t make enough milk so we’ll penalise you.”

Freshways stated milk volumes had dropped ‘like a lead balloon’ and it was optimistic this would mean
improved farmgate prices soon.

NFU dairy board chairman Michael Oakes called for a more ‘grown up relationship’ between farmers and processors. He said: “Some of it seems to be processors wanting their cake and eating it. Farmers seem to be taking all the risk and all of the pain.

“Many have been through the pain of low prices during oversupply. They should get some of the benefits of undersupply too.”

Benefit

Meanwhile, Meadow Foods’ executive chairman Simon Chantler also wrote to its suppliers reassuring them it would not follow other processors’ moves by scrapping its A and B pricing system.

He also highlighted Meadow Foods’ B price would be 17.5ppl for July and ‘predictions are our August B price will be even higher’. Mr Oakes said: “If Meadow Foods is true to its word, farmers will feel the benefit of much improved B prices. That is the way it should be.”

Last week, Farmers Guardian reported Payne’s Dairies had decided to drop its A and B pricing system without notice.

Mr Oakes added: “There was talk that Charlie Payne was now having to buy milk at spot prices of over 20ppl. If he had put the B price up, he probably could have got that milk from his suppliers. There was no incentive for them to produce that extra milk.”