Last week North East milk buyer Charlie Payne wrote to his 120 or so suppliers to let them know that from that date they would cease to operate an A and B pricing system. To recap – Paynes’ A volume was based on a suppliers lowest production over 3 months in 2014 and the current B price is 9ppl. Paynes’ is also considering a way of penalising farmers that have produced less milk than anticipated – even though they have been encouraged, and in some cases bullied, into reducing production. Paynes has also brought in this change with no notice whatsoever.
In the NFU’s view a mutually acceptable A and B pricing system would see farmers receive an A price based on the company’s core A volume requirement and a B price for milk produced over this core requirement. The B price should be linked to spot market indicators – and as these are currently increasing so should a farmers’ B price.
Rather than penalise individual farmers for going under or over profile would it not be in the best interest of the dairy processor (and its supplying farmers) to look at milk volumes collectively – matching supply with demand. This is where a producer organisation could work on behalf of its members in managing the supply of the milk pool.
NFU Comment
Michael Oakes said: “I urge farmers to ask themselves whether they’ve been happy with the behaviour of their milk buyer over the past 18 months? Do you feel you are working with or for your milk buyer? Consider those answers when you start seeing the milk price increase and new contracts become available. If I was a milk buyer that had taken advantage of a difficult market situation and my farm suppliers I’d be rightly worried now of losing milk suppliers once the markets turn and buyers start to recruit again.”
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