As dairy farmers gather at the Welsh Dairy Show in Carmarthen, NFU Cymru is warning of the precarious financial situation of liquid milk processing and the severe impact this is having on primary producers and the wider supply chain.

Speaking at the annual show at Nantyci, NFU Cymru Milk Board chairman Gareth Richards will tell farmers, showgoers and the assembled media that increased price pressures are putting the long term prosperity of the sector at severe risk.

Mr Richards’ concerns come just weeks after north Wales processor Tomlinson’s Dairies Limited entered administration, affecting over 70 dairy farmers, many of whom are from Wales.

Such is the level of anxiety across the sector that NFU Cymru, along with other organisations across the UK, has written to the EFRA committee to conduct an urgent investigation into the liquid milk market.

Gareth Richards said: “A number of discounters and major retailers continue to sell milk at low prices; just last week we saw retailers offering two litres of semi-skimmed or whole milk for £1, with some wholesalers reducing the price even further below £1.

"Meanwhile the farmgate milk price paid by most major processors in the liquid milk sector is in the region of 24/25ppl, a price putting pressure on many farmers who have struggled to recover from the 2016 downturn which saw farmgate prices drop below 20ppl.

"There are a number of retailers who are paying a fair farmgate price for liquid milk, often based on a cost of production formula, and therefore farmgate price for these producers are not impacted by retail promotions. Regrettably market intelligence indicates that only around 7 per cent of UK milk is sold this way.

“While we understand that promotions are used as an attempt to stimulate demand and increase sales these low prices are having a huge impact further down the supply chain.

“NFU Cymru has long argued the need for greater fairness and transparency across the dairy supply chain. We have a situation where primary producers – the ones taking the risk on milk price – are feeling the pain of a softening of prices further up the supply chain, often without consultation.

"The sad reality is that the UK dairy liquid milk market is no longer functioning properly. That’s why we are now calling for all businesses within the supply chain, including retailers, discounters, food catering businesses and food manufacturers to work with primary producers and processors in a robust, trusting relationship that helps to deliver sustainable returns for all involved.

“We know that around 98 per cent of UK households regularly consume dairy products, so the demand is clearly there. We need to ensure that all of those involved in the production of these products, particularly liquid milk, receive a fair return for their work.”