First Milk and Arla suppliers are facing further price cuts as the overall market situation shows little prospect of improvement until 2016, according to National Farmers Union (NFU) dairy board chairman Rob Harrison. First Milk has announced a cut of 1ppl for A volumes from all milk pools from 1 July, while Arla suppliers face fresh cuts, expected to be announced later this week, due to exchange rate movements.

The only exception to the cuts in First Milk is the Midlands Balancing pool which will see a 0.7 pence per litre reduction.

Commenting on the cuts, NFU dairy board chairman Rob Harrison said, “We are in a position now whereby the majority of dairy farmers in the UK will be receiving milk prices far below the cost of production. This is simply not sustainable."

The chairman added that what dairy farmers need is a "guarantee from our milk buyers that they are doing all they can to get the best possible price from the market. But above all, we need the industry to work with us to develop a rigid and practical set of risk management tools that can benefit our farmers and support them with fair prices during a period of market volatility.”

It was also announced this week that Sir Jim Paice will step down as chairman of First Milk.

NFU President Meurig Raymond said, “Jim has chaired First Milk through a very turbulent time for First Milk, its members and the entire dairy industry."

Paice said that signalling his intention to stand down allows the Board to "immediately start work on scoping out the personal and professional qualities that they require in a new chairman, and initiating a recruitment process. In order to ensure an appropriate transition, I will stay in role until a smooth handover to a new chairman is achieved.”

Although milk production is up globally, including 8% in Ireland and 3.8% in the UK, Harrison said there was not a market for it despite growing demand.

“We have had 450 farmers exit the industry in the UK in the last 12 months and that is probably going to rise. A Promar report suggests it could be 2000 – it is likely to be a lot less than that but a lot of sales are being advertised. Some are slowly dripping to death by selling culling cows,” he said.

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