Farmers to cut milk supplies in rerun of petrol blockades

Three years ago it was petrol; now it's milk. The leader of a group of farmers picketing dairy plants in a protest over prices warned yesterday that they will cut off the nation's milk supply next week unless their dispute is resolved.

David Handley, the Monmouthshire farmer who was one of the ringleaders of the fuel protests which brought Britain to a spectacular halt in September 2000, said that all major milk processing sites would be blockaded within seven days by his Farmers for Action (FFA) group.

The protest is a dairy version of the petrol campaign which sparked panic in Downing Street when lorries blocked access to refineries and storage facilities. It will be targeted at factories run by the main processors such as Dairy Crest and their distribution centres which are used by the major supermarkets.

The farmers are angry about what they claim is a failure by the five main milk processing companies to pass on a 2p per litre price rise. The increase was agreed by large retailers to ease heavy losses being suffered by farms, which produce 14 billion litres of milk a year.

Mr Handley, who has been co-ordinating a series of low-key pickets outside dairies across the country for the past 10 days, said the time had come to up the ante: "We have got to the point where the dairy industry is disappearing before our eyes because each and every pint of milk is produced at a loss.

"This extra 2p will not solve the problem but it is a step in the right direction and we are not even getting that. It means we are left with no choice but to take escalating action.

"If the situation isn't resolved by the end of this week, we will start a 24-hour blockade of all the major dairy sites in Britain. Within a few days, there will be no more supplies of milk on the shelves."

The organisers, who insisted that they considered the blockade was a "last resort", said they had met this weekend to finalise plans for the operation to target up to 30 depots and factories.

Farmers for Action said it would work to ensure that supplies for hospitals and schools were maintained. Preliminary protests will continue today with the first of a series of five-hour daytime blockades. Three plants run by Britain's biggest processor, Dairy Crest, were blockaded for three hours on Sunday night by up to 125 demonstrators.

The prospect of columns of tractor trailers and muck spreaders laying indefinite siege to cheese and bottling plants from the London suburbs to rural Cumbria has its roots in a punishing economic climate for Britain's 25,000 dairy farmers.

While arable and some livestock farmers were told last week to expect a four-fold increase in their profits next year, their dairy colleagues, who have been running at a loss for the past five years, were forecast to suffer further losses. A report by the accountants Deloitte & Touche found that the average dairy farmer will make a loss of £7 per acre this year compared with a national average profit of £17 per acre in other sectors. Several Government reports have called for greater co-operation to increase the amount received by milk producers.

But farmers' leaders point out that the current "farm gate" price of 17.8p per litre still falls below the production cost of 20p to 23p per litre.

Earlier this summer, the major supermarkets, including Tesco, Sainsbury's, Asda, Safeway and Waitrose, agreed to a 2p per litre rise in the price paid to dairy processors on the understanding that the money was passed back to farmers.

A spokesman for Tesco said: "We have taken price rises from the processors to support farmers. It's our expectation that all or part would be passed on to farmers."

The protest organisers allege that the rise is being swallowed by the leading dairies - Dairy Crest, Robert Wiseman Dairies Ltd, Express Dairies, Arla Foods and Associated Co-operative Creameries (ACC), part of the Co-op group. It is the first instalment of the extra 4p per litre that farmers want by next summer to bring them back into profit. It is claimed that most processors are passing back less than 1p per litre. Both Dairy Crest and ACC, who estimate the extra return to their suppliers at 0.8p and 0.5p per litre respectively, insisted that they were passing all the extra money back.

A spokesman for Dairy Crest, which recently announced a 4 per cent increase in profits to £77m, said: "Every single penny is going back [to the farmers] but the problem is that only a proportion of our customers are from the retail sector and there is no corresponding price rise being paid elsewhere.

"We cannot fund the 2p extra for every litre going to other sources so the supermarket money has to be shared among all our direct suppliers and therefore the result is less than the 2p for each of them."

Farming experts say the problem for the dairy sector, which has lost 11,500 farmers in the past eight years, lies in changing demand for milk and the influence of the large retailers.

The supermarket share of the liquid milk market has increased from 65 per cent to 83 per cent in the past six years. In the past three years, supermarket prices have risen by 7.6p per litre while the price received by farmers has increased by 3.1p per litre.

Nick Everington, chief executive of the Royal Association of British Dairy Farmers, said: "At the moment the average income of a dairy farmer is £2.90 per hour for a 70-hour week. It is not a way of life that is sustainable.

"While we don't approve at all of the proposed methods of FFA, we have sympathy with their aims."