Dairy farmers still producing milk at a loss despite rising prices

19 minutes ago Elen Davies BBC Wales Getty Images Farmers say continued cost pressures mean dairy farms are being squeezed on increasingly tight margins Farmers are operating at a loss despite a rise in farmgate milk prices, the vice-president of the Welsh Dairy Show has warned. Dyfrig Griffiths, who farms in Llangoedmor near Cardigan, said farmers were still supplying milk below the cost of production.

Farming unions have called for certainty and a long-term strategy "to realise the significant potential of the Welsh dairy sector". The Welsh government said it offered a range of "support suitable for dairy farms to enhance their financial and environmental performance". A farmgate price is the amount a farmer gets for milk before the cost of transport, processing, packaging and retail markups is added.

Dyfrig Griffiths gets 39p per litre for his milk but production costs are currently 40p per litre "Over the last year, our milk price dropped to 30p a litre," said 63-year-old Griffiths. "At the start of the year I worked out that our production cost was 38p a litre, so we've lived on 30p - making a loss of 8p throughout the year." Describing what difference a few pence made to his farm, he said: "In milk cheque terms, every penny would be £4,000 a month.

So we've made huge losses up until now. "Nobody can make any money at 30p a litre, regardless of size or system." 'We're still losing money' In September, Griffiths received an increase of 3p per litre for his milk and a further increase of 6p in October, but despite an overall increase of 9p he said he was still not breaking even.

"I can see light at the end of the tunnel now with 39p a litre, but the problem is our production costs have gone up through the year because of fuel and fertiliser. "Everything that comes on the farm seems to be more expensive, so in reality our production cost has crossed 40p now, so we're still losing money," he said.

"The only reason we've had an increase, I believe, is because we had a drought this year, production in the country dropped and then milk production came back into balance between demand and supply." The price farmers get for their milk is based on supply and demand and every farmer will get a different amount for their milk depending on who they supply.

Away from the farm, although milk prices are more stable for consumers, there has also been a rise over the years. The latest figures from the Office for National Statistics show that four pints of whole milk cost an average of £1.66. In 2018, it was £1.10 - an increase of just over 50%.

In Cardigan, people said the increase in the price of milk did not impact them buying it Christine Lillywhite, from Cardigan, goes through about six pints of milk a week and said the price did not influence how much she used. "I still like milk in my tea and coffee, and if I'm making a sauce, I still use it," she said.

Hugh Bevan, from Dinas Cross in Pembrokeshire, agreed. He drinks about three pints of milk a week, and said: "I'm one of these people who hardly looks at the price of things. In the bag." Reacting to the 56p increase since 2018, Sara Smith, from Crickhowell, said the price "didn't seem too bad considering inflation", but added she could "understand if you've got three or four children it will make a difference".

Enfys Wyse says the price of milk for consumers isn't "too bad" Enfys Wyse, 57, who owns a tearoom in Cenarth, Ceredigion, said she had noticed a change in milk prices over the years but claimed it "hasn't been too bad". "Over the past 10 years, it's gone up £35 a week. "In the summer, when we're really busy we go through 10 to 12 two litre [bottles a day] and then in the winter, we go through five to six," she said.

"We've got to use milk for coffee, to do pancakes. You need it, you've got to use it, whatever the price is." Referring to the increase, Wyse said she thought it would have been more. "You need milk, so you don't mind paying extra for what you get.

"I think it's quite low really." As winter approaches - the time of year when costs can be at their highest for farmers - NFU Cymru said there were "renewed concerns that tight margins are being further squeezed". They are encouraging the Welsh government to help give stability to the sector which they say is worth £929m to the economy.

Farmers Union Wales said a clear long-term strategy was needed for Wales "to develop its dairy industry to overcome the volatility of milk prices and input costs". The Welsh government said: "We recognise the particular pressures facing dairy farmers, driven by global oversupply. "We are committed to the dairy sector in Wales and through out agricultural schemes offer a range of support suitable for dairy farms to enhance their financial and environmental performance." It added that its £1bn funding commitment was providing certainty to farmers alongside the Sustainable Farming Scheme, which is available to all farmers.

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