The Royal Association of British Dairy Farmers has reinforced its call for an Off Milk Regulator to be introduced at the earliest opportunity following Arla Food's unnecessary decision to cut its milk price to producers by 0.35p/l at a time when they continue to face additional costs.

"Dairy farmers cannot tolerate Arla's completely unjustifiable actions that suit the intentions of a PLC, and which reflect the continuing shambles of the dairy marketplace," says RABDF chairman, Tim Brigstocke. "For starters, all producers have experienced cost increases on all essential inputs during the last two years including a 40% price rise on fertilizer, 30% on fuel, 10% on other energy costs and a 5% hike in wages," he explains. "Furthermore, RABDF has determined from its own recent farmer study that a further 3.81p/l should be added to milk production costs to cover the cost of the farmers' own labour on an average size family dairy enterprise. That figure rises to between 5.5p/l and 6p/l on a 150 to 200 cow unit taking in family contributions added to hired labour."

Mr Brigstocke continues: "In our view, Arla's milk price cut demonstrates that the current market mechanisms are simply not working and it presents a classic case of why we need an Off Milk Regulator to introduce some joined up thinking to the dairy food chain, offer solutions and subsequent stability to the marketplace."

Calls for an Off Milk Regulator to achieve greater transparency throughout the industry were initially made by RABDF 12 months ago in its evidence to the milk pricing inquiry staged by the Government's Environment, Food and Rural Affairs Committee. The association's case was agreed in principle by committee chairman, David Drew MP who reiterated the fact at RABDF's National Dairy Conference earlier this year.

"We have a power structure problem with four major retailers, four processors and more than 20,000 farmers, and there is no price negotiation mechanism in place without direct action," explains Mr Brigstocke. "Introducing an Off Milk Regulator would enable the investigation of the cost structure in both the processing and retail sectors to ensure that the total margin made within the industry is fairly distributed. While we accept that retailers' shareholders should have a fair return on their investment, so too should all dairy producers if their businesses are to remain sustainable."

He adds: "We continue to have a position where the true costs of milk production exceed the milk price received to the majority of producers. This is no way to maintain a viable industry. The time has come for an Off Milk Regulator to be taken seriously to prevent any further unjustifiable milk price cuts."