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Westcountry dairy farmers angry at cut in price for milk

By Western Morning News  |  Posted: January 09, 2013

MilkLink
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Dairy farmers in the Westcountry, who were members of the farmer co-operative Milk Link, are angry at a payments cut from their new organisation.

They are facing a cut of 0.23p per litre, imposed by Arla Foods, the Danish-based giant dairy co-op with which Milk Link merged last summer.

The slashed price flies in the face of the new voluntary dairy code of good practice for contracts, which emerged in August following widespread protests about payments to farmers being cut.

The current situation has seen National Farmers' Union dairy board chairman Mansel Raymond calling for urgent discussions with former Milk Link chief executive Neil Kennedy, now Arla Foods senior vice president for milk and member services.

Mr Kennedy is also currently chairman of Dairy UK, the trade organisation for dairy farmers, producer co-ops, milk processors and doorstep deliverymen.

Milk Link had 1,600 farmer members, mostly in the South West, supplying milk. They now will receive payments of around 28.5p per litre, still adrift from 30p per litre – the widely accepted industry target for a profitable business.

Arla – which also owns the brands Cravendale, Anchor and Lurpak – says the cut relates to an adjustment on the exchange rate between the pound and the Danish Krone. In other respects the former Milk Link members are being paid on a par with Arla's Danish farmer suppliers.

"Clearly it is unfortunate and very disappointing," said Nicola Hedge, of Arla UK.

"But prices are calculated in Krone, and exchange rates change. We shall eventually see it swing in the opposite direction. This is down entirely to the variations in exchange rates, and nothing else."

Danish farmers benefit from a profit-sharing deal which takes them up and over the 30p-per-litre level.

Arla Milk Link members, though, do not qualify, because the terms of the merger deal exclude them from any cut of the profits for three years.

And if they want to get out of their contract they have to wait until the end of the financial year, and then serve a 12-month notice period.

When the merger was first mooted Milk Link members saw it as a guaranteed safeguard against price volatility, and voted 99 per cent in favour of it going ahead. Leading the current campaign against the payment cuts is Somerset producer Paul Candy, who built up a £100,000 stake in Milk Link. He said there was major resentment over the predicament the co-ops' former members now find themselves in.

"This could ruin businesses and ruin lives," he said, adding that the Arla directors should be working in the best interest of the co-op's members, not allowing a cut in payments.

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