Cuts to the milk price paid to farmers will drive them out of the dairy business and increase prices for consumers in the long run, farming leaders have warned.
Farming unions from across the UK are holding a summit in London on Wednesday to fight back against the price cuts which were announced by three leading processors, Arla Foods UK, Robert Wiseman Dairies and Dairy Crest.
The reductions of up to 2p per litre from August follow cuts for many dairy farmers imposed in the spring, and the NFU is warning that producing a litre of milk now costs many farmers significantly more than what they are paid for it.
The cuts could reduce the average dairy farmer's annual income by up to £40,000, the NFU warned.
Vice president Adam Quinney has urged UK Farming Minister Jim Paice to "bang heads together" within the sector to ensure farmers are paid a fair price for their milk, and to push back on regulation that adds costs to producers.
He said farmers who do not have contracts that see them supplying Tesco, Sainsbury's, Marks & Spencer or Waitrose will be losing £350 to £400 per cow per year.
"The latest round of cuts to milk prices by three major dairy processors will mean dairy farmers are making a significant loss for every litre of milk they produce," he added.
Average milk prices for many dairy farmers are currently below 25p per litre, even though their production costs are running at more than 30p per litre.
It is hoped the negotiations will help deliver better contracts, which at the moment can see farmers locked in to supplying milk for long periods even though processors may just give them a few days notice of price cuts.
NFU Scotland’s President, Nigel Miller said: "There is no mistaking the sense of crisis among milk producers. Recent price cuts have stripped millions of pounds out of dairy farmers’ businesses and created anger, frustration and fear for the future.
"The situation has also created a level of unity within Scotland and the rest of the UK – between farmers and farming unions alike – to break the destructive power of discretionary pricing.
"We are at a crossroads, and our best option is to agree upon the goals which can actually lead to change. This may require legislation from Westminster or Holyrood, or both."
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