THE latest price drop announcement by First Milk will come as a bitter blow to Welsh milk producers who are already operating at a milk price that is far below the cost of production, NFU Cymru president Stephen James has said.

Mr James, who farms in Pembrokeshire and is a First Milk supplier himself, said: “We are in the depths off a crisis and the announcement for the September milk price will be hugely disappointing to dairy farmers. Let’s be absolutely clear that the current farm gate milk price is at an unsustainable level.

“I met with First Milk to stress to senior management these concerns and seek assurances on their business model and strategy going forward. We know that the markets in which First Milk are trading –commodity cheese, milk brokering and milk powder - are extremely difficult, but its members need to see some improvement in the near future.

“After meeting with the senior management I am reassured that the new team have stabilised the finances and that the new Chief executive, Mike Gallagher, has a clear strategy and plan with a clear deadline to improve First Milk’s comparative milk prices, over and above any market price impact. The start of this is assurance that the capital investment requirement is reverting back to 0.5ppl from 2ppl and this will be seen in the September milk cheque.”

"Recent weeks have seen moves from a number of retailers (ASDA, Morrisons, Lidl and Aldi) to better support their liquid milk pools, and join those retailers that have had initiatives in place for a number of years (Tesco, Sainsburys, Co-op, Waitrose and M&S). So far progress has been much slower on cheese – with Tesco the only retailer to offer a market leading cost of production price for a certain proportion of their cheese supply.

"NFU Cymru has been urging retailers to offer as much support to their cheese supplying farmers as they have their liquid milk suppliers. With a quarter of British milk processed into cheese more support for the farmers supplying milk for cheese is vital. We know British consumers want to see more British cheese on retail shelves – let’s ensure that they have the opportunity to purchase it going forward.

“A clear move on cheese from all the major retailers would undoubtedly help the industry and a business like First Milk. Haverfordwest has a world class cheese processing facility and clear retail signal would give much needed confidence to its member supply base.”