Accused: Phil Hogan

ANNOUNCEMENTS by Arla and First Milk at the beginning of July that they were to cut the price paid to dairy producers by 1p/litre has resulted in a deepening sense of crisis within the Welsh dairy industry.

Plaid Cymru’s Shadow Minister for Rural Affairs, Llyr Gruffydd AM, called on the European Agriculture Commissioner, Phil Hogan to acknowledge that there is a crisis in the Welsh dairy sector on the day that he visited the Royal Welsh Agricultural Show.

The EU Commissioner will visited the show on Monday (Jul 20), as dairy farmers in Wales continue to produce milk at a loss with no prospect of a price increase until at least next year.

Mr Hogan has been widely criticised for refusing to acknowledge the true scale of problems facing the industry. He was criticised for claiming in January that milk prices were holding up well and there was no dairy crisis, and was further challenged to make the long overdue recognition by MEPs in the European Parliament earlier this month.

Plaid Cymru’s Shadow Minister for Rural Affairs, Llyr Gruffydd AM said: “With devastating milk price cuts at farm gate level, the short-term fortunes of dairy production is pretty grim. No business can carry on producing at a loss for very long and it is time for the Commissioner to acknowledge the scale of the crisis. Producers have seen more than a third knocked off their milk price in less than 12 months and this is having huge repercussions for the rural economy.”

The AM continued: “The Royal Welsh Agricultural Show is the biggest event in our farming calendar, and if the EU Commissioner is meeting with farmers here today then he needs to be honest with them. That means acknowledging that the dairy industry is in crisis. After seeing the Tory UK government cut the overall CAP budget by 10% and then a Labour Welsh Government cutting direct subsidies to Welsh farmers by £1/4bn, plummeting farm-gate prices come at a most difficult time.”

Pointing out the role of supermarkets in driving down prices, Mr Gruffydd concluded: “Large retailers also have a key role to play. Using milk as a loss leader inevitably devalues the product and it should not be happening.”

Optimism expressed by Welsh Conservatives that the removal of milk quotas in an already difficult market would not lead to price falls for Welsh farmers has been shown to be nothing more than wishful thinking. The fears of the FUW that abandoning quotas would adversely impact smaller producers, who predominate in the Welsh dairy market, appear at this stage to have been fully borne out.

Rob Harrison, head of the NFU’s dairy board said: “450 quitting dairy farming since this time last year in England and Wales. The recent series of cuts have highlighted the need for short-term solutions to address the problems happening now – farmers need urgent help from industry and Government. We need Government to move away from paying lip service and focus on the here and now. Their long-term solutions must take a back seat while we focus on the immediate crisis; we need them to insist on best practice in the supply chain, look at growing dairy consumption and supporting more investment in dairy processing in the UK – and this needs to happen now.”

Since 2002, more than half of Britain’s dairy farmers have gone out of business, defeated by rock-bottom prices and rising costs. For the past few months, even those that have survived have been caught up in another perfect storm. Britain consumes more than four-fifths of the milk it produces, but its price is dictated globally, by the cost of producing milk in, say, New Zealand or the US.