The news that Dairy Crest is to reduce its farm gate milk prices by 2 pence per litre (ppl) to its unaligned producers is a disgrace and highlights the weakness of milk contracts in general, the Farmers' Union of Wales dairy and milk committee chairman Dei Davies said today.
"The rate these milk producers will now get paid is 3-4ppl below the costs of production, which is quite frankly scandalous," said Mr Davies.
"Dairy farmers are often adversely affected by poor contracts. They may be required to give 12 or more months' notice to pull out but the price the farmer is paid can be changed at a few days' notice by the processor," added Mr Davies.
"There is no reason for these milk prices to drop other than that Dairy Crest has lost the contract of a major supermarket and this is putting dairy farmers in an impossible situation.
"The Union believes that urgent Government action is required to eliminate unreasonable contractual practices and create fairer and more balanced terms for farmers.
"It is obvious that there is a need to introduce legislation as a matter of urgency if the Government wants to ensure the survival of the milk and dairy industry," added Mr Davies.