Co-op to increase milk payments after farmer protests

The Co-op has announced it is to increase the premium it pays on milk to farmers within its group, following protests over the prices some supermarkets pay suppliers.

The company said it wanted to recognise the importance of "ensuring sustainable future" for British dairy farmers.

Hundreds of farmers have been protesting at cuts of up to 2p a litre by blockading milk processing plants.

The National Farmers' Union described the Co-op's move as a "positive step".

Farmers for Action (FFA) is warning that hundreds of dairy farmers could be forced out of business by price cuts - as well as rising feed costs - which would lead to milk being imported in large quantities.

It says some supermarkets pay a fair price directly to farmers for liquid milk.

But it warns that farmers are making a loss of up to 3p a litre on milk used in dairy products - such as cheese, milk and butter - sold by some of those same supermarkets.

The Co-operative Dairy Group (CDG) said the premium farmers would receive will rise to 2.57p a litre (ppl) with immediate effect and to 4.27ppl from 1 August, following processor reductions. It brings the total price they receive to 29ppl.

Steve Murrells, chief executive of Co-operative Food, said: "We have been in continual discussions on this issue with the National Farmers' Union and we have listened to their concerns.

"We are taking this action to help alleviate the immediate pressures that farmers within the CDG are facing. Going forward, we are committed to finding a supply model that is sustainable for the long-term future of our dairy farmers."

The Co-op, along with Asda and Morrisons, has previously pointed out it that pays a premium above the market price charged by suppliers.

NFU president Peter Kendall said: "Their recognition of the real difficulties being faced by British farmers this summer and commitment to support them through these difficult times is to be applauded. But whilst this is an important move, all retailers must move to a sustainable funding model for the dairy industry."

Meanwhile, Chancellor George Osborne visited a farm in his Cheshire constituency to talk to a dairy farmer about milk prices.

Sarah Williams had challenged Mr Osborne to visit when she met him during a dairy farmers' rally in Westminster earlier this month. A Treasury source said Mr Osborne "listened to concerns".

Hundreds of farmers protested at sites in Somerset and Yorkshire on Thursday night, and on Friday more than 200 farmers met in Carmarthenshire to discuss their next move.

Further blockades have been threatened for Friday night.

The NFU has said the cuts would be felt by 27% of producers, and impact on 25% of the milk market volume.

Mr Britten said that, as a last resort, the farmers would pour their milk "down the drain".

The Robert Wiseman Dairy processing plant off junction 24 of the M5 near Bridgwater in Somerset was blockaded by more than 200 farmers with their tractors during the protests. Hundreds of farmers also blocked deliveries at the Arla plant in Ashby-de-la-Zouch, in Leicestershire.

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Farming Minister Jim Paice earlier said that, while government "cannot and should not" set prices, he would try to "get all levels of the supply chain to make the real changes needed to guarantee the industry's long-term future".

In the dairy industry, the processors set the price they pay farmers for their milk.

Four leading dairy processors recently announced the latest cuts - applied from 1 August.

Robert Wiseman Dairies and First Milk have both cut the price by 1.7ppl, Arla Foods UK by 2ppl and Dairy Crest by 1.65ppl.

They say they have had no choice because the price they can sell cream for on the commodities market has fallen sharply in the past 12 to 18 months.

Milk processing involves skimming off cream to make milk more palatable for consumers.

The NFU said an average farmer, with about 150 to 200 cows, would lose about £37,000 in revenue from the combined effect of previous cuts in May/June and the new cuts in August.