IN THE FACE of the current dairy crisis, the Farmers’ Union of Wales is once again calling on major UK supermarkets to commit to the procurement of Welsh dairy produce, and to ensure that the prices paid for dairy products are such that confidence in the long term future of the sector is revived.

Speaking after a recent FUW milk and dairy produce committee meeting, chairman Dai Davies said: “The FUW has written to the leading supermarkets in the UK to highlight that last year saw many months of consecutive downward milk pricing, which has caused major problems for the sector.

“Whilst some forecasts predict a decline in global milk supplies in the latter half of 2015, the Russian trade embargo, coupled with reduced demand in China and a weak economic environment, will likely delay price rises beyond any potential downturn in production.”

According to figures supplied by Defra, the average November UK farm-gate milk price was more than 16 percent lower than the same month in 2013 and is the lowest farm-gate price since September 2012.

“The falling dairy prices experienced by producers in Wales raises significant concerns within the dairy industry, and a lengthy delay in milk price recovery now seems certain due to a continuing supply and demand imbalance within the global marketplace.

“Factors such as low milk prices, poor profitability and long-term uncertainty in the sector have severely undermined confidence in the long term sustainability of this industry; the very nature of which requires a long term commitment and investment from producers,” added Mr Davies.

Whilst the Union recognises that dairy farmers supplying supermarkets on a dedicated supply contract have received more favourable milk prices, such farmers represent only a small fraction of the Welsh dairy sector – around 4 percent of production – and are therefore unrepresentative of the industry as a whole.

“Failure to secure commitment by providing sustainable prices for dairy should be a major concern for all those within the supply chain. Between January and September 2014, UK dairy imports of cheddar cheese, speciality cheese and butter were around 77,000, 271,000 and 42,000 tonnes respectively and the union is therefore urging the supermarkets to ensure that a concerted effort is made to source dairy products from within our own shores,” added Mr Davies.

However, Sir Jim Paice MP, head of dairy co-operative First Milk said that supermarkets were not wholly to blame for the crisis.

“It is tempting to blame the supermarkets for the current downturn in milk price we’re experiencing but I have to say, as Chairman of First Milk, the crisis that we’re seeing today in the milk industry is not really the supermarkets’ fault,” said Sir Jim Paice, when speaking to NFU Cymru members in Pembrokeshire recently.

Sir Jim continued, “I believe the fundamental problem with the dairy industry at the moment is that there is too much milk on the market. We have seen an approximate increase of 10% of milk produced in the UK alone this year. That has been exacerbated by two things, China dramatically reduced its purchase of milk powder and then Russia introduced its trade ban, which included dairy products. With a third of EU cheese exports going to Russia – that was the final straw and that’s why our milk prices are where they are.

“It has resulted in a very serious situation throughout the country at the moment, particularly here in south west Wales where milk is obviously a hugely important industry.” Sir Jim Paice informed Pembrokeshire NFU Cymru dairy farmer members who attended the meeting.

He used the meeting to assure those farmers that supply First Milk that the co-operative was here to stay and everybody is getting paid for the milk they have produced. He insisted that First Milk was in a very very strong position now, the strongest it has been for many years, and it should be strong enough to withstand the volatile next few months ahead.

John Davies, NFU Cymru Deputy President and Euryn Jones, Agriculture Manager for HSBC Bank, the conference’s sponsor, both agreed with Sir Jim that we were witnessing extremely volatile times at the moment in dairy, as well as other sectors of farming, and both agreed NFU Cymru and the bank were there to help assist members and customers any way they can to get them through the volatility. John Davies said, “What we all want is a fair price from the market place for what we produce.”

Sir Jim is currently the Conservative’s Member of Parliament for Cambridgeshire but he is due to stand down at the forthcoming General Election this spring. A Suffolk farmer, farm manager and training manager, Jim Paice was in the position of Minister of State at the Department for Environment, Food and Rural Affairs in 2010 when negotiations first started on the current CAP reforms.

Reflecting on his time as Minister he said that we’ve ended up with a Common Agricultural Policy (CAP) which is pretty similar to what was originally proposed. He explained, “I’m not saying that means the first proposals were right, what I’m saying is that it was very difficult for 28 very different countries to agree. Discussions were impossible when each Minister from each Member State was given just three minutes to give their views on the proposals. It ended up with each Minister giving set speeches – not a discussion!”

Simon Richards, NFU Cymru’s newly elected Chairman for Pembrokeshire, and a dairy farmer from Haverfordwest, thanked all the speakers at the County Conference, particularly Sir Jim Paice MP, for his insight into the current situation at First Milk and his time as Defra Minister. Mr Richards also thanked HSBC Bank for its generous sponsorship of the event.