First Milk pay to dairy farmers delayed by two weeks

More than 1,000 British farmers will not be paid for their milk on Monday because of a financial crisis at the dairy co-operative First Milk.

First Milk told farmers that Monday's cheque and all subsequent payments - will be delayed by a fortnight.

The National Farmers' Union president said news of the deferral had made members "extremely anxious".

But a co-operative spokesman argued the move would "put our finances and our business on a stronger platform".

First Milk is one of the UK's largest dairy farmer co-operatives, and runs a number of milk production facilities across England, Scotland and Wales.

As well as withholding money from farmers for a fortnight, the company announced on Thursday it would increase capital levy contributions and recoup extra capital from its members.

First Milk: In numbers

1.2bn litres of milk produced per year

Over 50,000 tonnes of cheese produced per year

400 employees

Works with 1,300 farmers

Supplies products to Tesco, Sainsbury's and Morrisons

Source: First Milk

NFU President Meurig Raymond said: "Make no mistake, I have heard from NFU members, some who are extremely anxious."

He stressed it was "paramount that the financial stability of First Milk is secured".

The co-operative's chairman, Conservative MP and ex-farming minister Sir Jim Paice, said the company was "acutely aware of the difficulties this current extreme volatility is causing".

He added that banks had been informed and their staff would be ready to deal with queries from farmers whose direct debits bounce.

Farmers' views

David Handley is a dairy farmer, chairman of Farmers for Action and says the industry is in a "state of limbo".

Speaking to BBC Radio 4's Today programme, he said: "They're not quite sure where things are going. There's not a clear message coming out from First Milk to any of us within the industry.

"That is compounded if you are a family farmer supplying First Milk and you have bills to pay and you're just unsure at the moment of which direction this business is going to go in.

"A majority of dairy farmers in the UK are either on cost of production or, in some cases like First Milk suppliers, well below that."

He added the current situation is "not sustainable" and that this is a "global issue".

He said: "We've got to try and turn this industry around. Dairy farming in the UK has gone through 10 years of turmoil and it's got to change.

"Why are we allowing retailers to discount milk purely and simply to get people into their stores?

"That shouldn't be happening to any industry whether you're producing a radio, a litre of milk or a bottle of water."

The NFU said in December that the number of dairy farmers had dipped below 10,000 for the first time - a 50% fall since 2001.

The difficulties faced by the dairy industry have been attributed by large milk buyers to global commodity prices: farmers worldwide are producing more milk, while at the same time demand, particularly in China, is falling.

The Russian import ban has also had an impact, as have supermarkets competing over lower prices.

Some farmers believe they should be immune to global dairy price cuts - since more than 80% of the milk produced by UK farmers is used in this country.