Further price falls will hammer the dairy industry
Processors have been warned they face a ‘mass exodus’ of dairy farmers if they follow Arla’s lead and drop milk prices.
Knock-on effects will be felt through the industry, with industry leaders warning farmers and banks would be unable to stand a repeat of the last downturn.
Farmers for Action chairman David Handley told farmers to ‘watch this space’ as processors would use it to justify cutting their prices.
Mr Handley said: “They will jump on it like a bandwagon. They will say it is due to a slowing down of markets.”
He added farmers would then face the same cycle with another milk shortage in six months.
“Until then they will reduce prices on the back of world markets and in autumn, they will be bringing it back to where it is now instead of raising it higher,” he said.
Agricultural Central Trading (ACT) area manager said it was not just farmers' livelihoods at risk.
"If they do drop prices, it will kill the dairy industry. The banks will not fund a bailout again,” he said.
“It will have a huge knock-on effect around the industry. My job is at risk.”
West Yorkshire dairy farmer Georgina Fort and NFU dairy board chairman Michael Oakes, both Arla producers, said farmers had been angered by what they saw as mixed messages after an appeal for more milk in the UK.
Mr Oakes said: “Last week, it made a statement about millions of pounds of added value in brands.
“Big talk sounds good, but how is it keeping our milk price up?”
He also questioned how similar European Co-operative FrieslandCampina could hold its price and had spoken of more stable markets when Arla ‘was only speaking about uncertainty’.
All eyes have now turned to Muller’s next announcement on prices. Mr Oakes said Muller’s decision could be affected by it wanting farmers to sign a new contract.
Mr Oakes said: “It is very keen to get new contracts signed and will not want unhappy farmers.
“If Muller hold, there will be more pressure from Arla farmers.”
Arla Foods amba board director Johnnie Russell said he was ‘extremely disappointed’ to reduce April’s milk price after seven consecutive increases, but blamed increasing pressure on the European market.