Ceredigion’s Welsh Liberal Democrat MP Mark Williams, has highlighted the crisis facing many dairy farmers in Ceredigion with Defra Ministers, in a debate in Parliament yesterday on the situation in the dairy industry.
Ceredigion’s dairy farmers are facing huge challenges as the industry continues to fluctuate. The ongoing global market volatility has seen a 50% reduction in prices in recent months, resulting in a farm gate price drop for dairy farmers of between 20-30 per cent. Recent milk price cuts have wiped an estimated £800m from the annual income of UK dairy farmers.¹
There are a combination of reasons for the fluctuations including an increase in dairy production and oversupply versus demand globally, a downturn in global commodity prices, a slump in Chinese demand for dairy, and a residual impact of the Russian ban on imports which has a limited direct impact on the UK but am indirect impact on the effect this has had on the rest of the EU’s dairy industry, as well continued pressure from supermarkets to sell milk at very low prices.
This is a reoccurring issue, the Government introducing the Voluntary Code of Practice last year in an attempt to tackle the problem. However, Mr Williams raised with the Minister the possibility of legislating to ensure this code of conduct for the diary sector is adhered to by all in the industry, along with other measures such as extending the remit of the Grocery Code Adjudicator, or establishing Producers Organisations such as Scotland’s ‘Dairy Farmers Together’, which is supported by the Scottish Government and means dairy farmers can work together giving them a better negotiating position. These groups have operated in other parts of the EU with success.
Commenting, Mark Williams, said:
‘The dairy industry is vital to the economy of Ceredigion, and Wales, and it needs support. In Wales the dairy sector employs thousands of people and accounts for a third of all agricultural output. Due to the current situation, milk is often sold for less than market indicators would dictate – this cannot go on.
‘The introduction of the voluntary code last year was welcome, but there is concern that those who comply with the code are at a competitive disadvantage, and that some are cherry picking parts of the code. The FUW has revealed varying levels of confidence in the code by farmers, with 9% of farmers extremely pessimistic about the code². There is also often a misconception that the Grocery Code Adjudicator can deal with this issue but it cannot, and its powers should be extended.
‘I also think we should look into the prospect of farmers working together within Producer Organisations as is happening in Scotland, so they can work together and have more negotiating power.
‘All of those in the industry deserve fair terms and conditions. Farmers should have a fair balance of power with their milk purchasers, and contracts should be formed in a way that means milk prices cannot not be dropped with little notice.
‘If consumers knew of the pressure supermarkets are putting on our small family farms for expected sale prices for milk, I am sure they would be happy to pay more, and I hope we can get this message across. In Ceredigion our communities and local economy relies on our small family farmers, so the impact of these measure is very significant for us all.’