Milk price code to be discussed at Royal Welsh Show

Farmers are worried about a cut in prices paid by leading dairy processors from 1 August

A code of practice over the prices paid to milk producers is to be discussed by farmers, retailers and ministers from the Welsh and UK governments.

The meeting will take place at the Royal Welsh Show in Llanelwedd, Powys.

The Welsh government has said it could legislate to help those affected by cuts in milk prices if the code fails.

It follows days of protests by farmers after four processors said they planned to reduce what they pay for milk by 2p per litre.

Dairy farmers and members of the Women's Institute protested at supermarket chain Asda's stand on Monday.

More than 100 people marched from the National Farmers' Union (NFU) stand, led by union deputy president Meurig Raymond, who farms in Pembrokeshire.

He told the firm's head beef buyer Jim Biggars: "You can see the anger and despair among farmers here.

"My message to Asda is to step up to the plate. Please give these people a chance."

Mr Biggars said Asda had increased the premium paid to farmers by 2p, which will take effect on 1 August when the four processors intend to cut their prices.

Allan Edwards, director of public affairs for Asda, said it was committed to working with farmers to find a solution in the long term.

He said Asda increased the price it paid for milk last week, and other supermarkets then followed suit.

It follows days of protests after four processors said they planned to cut what they paid for milk by 2p a litre.

'Long-term viability'

On Sunday, agriculture ministers from the Welsh, Scottish and UK governments, Jim Paice, Alun Davies and Richard Lochhead, met to discuss the issue.

Following the meeting, a spokesman said: "The dairy sector is a key part of our agricultural industry and all the governments in the UK are determined that it should have a profitable and sustainable future.

"In responding to the current situation, industry needs to address both the immediate issue of the price paid for milk and also the structures and mechanisms that will help underpin the long-term viability of the sector."

The three ministers agreed that a code of practice on milk contracts was "in the interest of the whole industry" at this stage.

They hope to reach "rapid agreement" with milk producers over the issue.

Farmers want a code of conduct put in place which would give them more bargaining power over the price they receive for milk.

They are often locked into fixed-term contracts with processing firms which are effectively middlemen who sell the milk on to customers including retailers and food production companies.

Processors say the global market milk price has fallen over the past year and that is why many farmers are being paid less.

But if no agreement on a code can be reached at a UK level, the Welsh government has already started work on draft legislation for fairer dairy contracts.

Speaking on Sunday, Wales' deputy Agriculture Minister Alun Davies said he would prefer a UK-wide solution, but if a proposed voluntary code of practice was deemed insufficient Wales could legislate.

He added: "If the UK government is not prepared to act we have to look in Wales to protect dairy farmers.

"We have powers under CAP (Common Agricultural Policy) legislation to protect our dairy industry."

The next meeting between processors and producers on the code of practice will take place at the Royal Welsh Show on Monday.

Environment Secretary Caroline Spelman, Mr Paice and Welsh Secretary Cheryl Gillan will all attend. Alun Davies is also expected to take part in the discussions.

The NFU said it cost farmers 29p to 30p per litre (ppl) to produce milk, but after the 1 August reduction they will receive 25p for their product.

"This is the economics of a madhouse. That is simply not sustainable," Mr Raymond said.

Morrisons said on Saturday it was increasing the premium to farmers on milk from 1p ppl to 3ppl, as well as introducing support payments for farmers affected by the recent bad weather equivalent to 3ppl.

The Co-operative announced last Friday it would increase the premium within its group to 2.57 ppl with immediate effect and to 4.27ppl from 1 August.