Mr Raymond said all the current market conditions provide ‘strong grounds for a sizeable increase’.
“This therefore leaves some very serious questions about why farmers are yet to see this reflected in their milk cheques,” he said.
“My message to milk buyers is very simple. Do you think that farmers can’t see milk prices rising across the rest of Europe; they don’t know about the record milk auction prices; they aren’t aware that exchange rates have been in our favour; that the level of imports have dropped off a cliff; that DairyCo’s Milk for Cheese Value Equivalent is 3ppl higher than this time last year or that cream prices rose over 13 per cent in March? Let me tell you that we do.”
“We can also see that milk production has reached a new low and that any hopes buyers may have had for a late spring flush are well and truly over. Buyers must behave in a proper manner towards their suppliers, and at the moment I believe that farmers and their representatives are being misled.”
Turning to retailers he said there were ‘certain activities working against dairy farmers’ resulting in them not getting fair returns for their milk.
He said while dedicated retail chains have delivered some meaningful benefits to dairy farmers in recent years, ‘any attempts to undermine or circumnavigate dedicated relationships by aggressive tendering tactics elsewhere in the market will not be tolerated’.
He added that the cheese market continues to be stifled. He attributed this in part to a ‘reported resistance by retailers to pay manufacturers prices that reflect market conditions and an unrealistic expectation that the rest of the supply chain should continue to fund ludicrous promotional offers’.
“Enough is enough,” he said. “If any retailer is expecting an influx of cheap Irish cheddar to match what they saw last year then they will be disappointed because the tables have turned.
“British cheddar production is already nine per cent down on last year and shortages in Ireland and elsewhere mean that any stocks we do have are in demand. Retailers should be securing British supply now, because when it’s gone it’s gone.
He pledged to investigate the dairy market situation ‘immediately’ to enable him to take the necessary steps to ensure that farmers get what they are owed.
Why a price rise is justified
The NFU has set out a number of reasons why milk buyers should be looking to increase the price they pay for milk:
World market prices have been firming since February, particularly for Skimmed Milk Powder and butter. In part due to tight supplies from Australia and New Zealand, but also because demand from China and Asia has come back strongly after the melamine scandal and recession in 2009.
The Fonterra April auction saw 17,000 tonnes of Whole Milk Powder traded at an average price of $3,969/tonne, this was 21.0 per cent more than the average price at the previous auction.
Prices on EU markets are generally trading higher and prices are currently at c.30 per cent above intervention levels.
Average milk prices across the EU-25 are rising. The average EU-25 milk price in January stood at €28.96/100kg - equivalent to 26.37ppl. In January 2010, 16 of the EU-25 countries had a higher average milk price compared to the UK, which stood at €25.89/100kg (23.57ppl), including the Netherlands, Germany, France and Spain.
The United Dairy Farmers (UDF) milk auction has produced another record breaking result with the highest March price in the past 10 years (and by a substantial margin). A total of 45 million litres of milk were sold at an average price of 25.63ppl,
UK bulk butter prices have been firm, driven partly by the rapidly rising prices being realised for bulk cream for export. Bulk cream is now trading at 122pkg.
Prices for mild and mature cheddar prices remain unchanged at between £2,600 - £2,950t.
The bulk cream price increased by 13.4 per cent between February and March to £1,225/tonne. This increased the estimated cream income to a liquid processor by 0.80ppl (13.3 per cent) to 6.82ppl.
Actual Milk Price Equivalent stood at 25.5ppl and Milk for Cheese Value Equivalent stood at 27.63ppl in March (compared to 24.63ppl in March 2009).
UK milk deliveries have fallen for the past six years and the 2009/10 saw a new low. In the UK in 2009/10 milk deliveries fell by 39 million litres (0.3 per cent) to 12,819m litres.
