New pricing proposals 'won't leave farmers out of pocket' (From Western Telegraph)

New pricing proposals 'won't leave farmers out of pocket'

Spring milk producers in Pembrokeshire will not be disadvantaged by First Milk's new pricing proposals, claim the co-operative.

There is concern that a new dual pricing structure will penalise producers in early grazing areas like Pembrokeshire. But this has been denied by First Milk, which predicts that the proposed system will have no significant impact.

Under the new system, farmers will be paid a core price of 80% of their average daily output throughout the year. The surplus will be paid at a second, marginal price which will reflect monthly production differentials. "Pembrokeshire members of First Milk will not be significantly disadvantaged under the new pricing proposals,'' said Jonathan Horrell, First Milk's head of communications.

"Reports have suggested that a new pricing system being proposed by First Milk would penalise Pembrokeshire producers because the area grows early grass. In fact, under the projections currently available, the proposed system would have no significant impact.''

Analysis by First Milk, based on the current production profile of Pembrokeshire producers, shows that the comparison between the current system of seasonality payments and the proposed 'dual pricing' system produces a net milk price fall of 0.03p per litre.

The co-operative argued that the proposed system was designed to reflect more accurately the market returns for each litre of milk produced. The core milk price would be protected against short-term fluctuations in supply and demand, it claimed, with the flexibility to vary the price for marginal milk in line with actual market conditions.

This marginal price is expected to vary significantly through the year. "Producers will be free to produce milk to the profile which suits their business - the difference will be in the proportion of the core and marginal price they receive,'' added Jonathan Horrell.

Consultation took place with First Milk members in Pembrokeshire last week. The milk buyer wants to finalise proposals in time for the new system to be introduced as an option from April 1st, extending to all producers from April 2004.