The Royal Association of British Dairy Farmers has welcomed the Competition Commission's initial findings of a study of the grocery market published today, 23 January, which recognises the current plight of dairy farmers.

The interim report concludes: “The number of dairy farmers has declined in recent years indicating significant difficulties in the sectors. Our analysis points towards grocery retailers earning an increasing share of milk revenues compared with processors and farmers.” The Commission goes on to recognise that the milk price paid to dairy farmers has ‘increased slightly since 1999 combining with increased productivity to increase average incomes'. However it concludes that that ‘it is not clear that this increase is consistent with an increased return on capital'.

It adds: “The benefit of increases in the retail milk price since 1999 have generally been retained by retailers, increasing their share of milk revenues compared with dairy farmers and processors, and we are concerned why this has been the case.”

RABDF chairman, Tim Brigstocke commented: “We welcome the document's findings. While it has not brought any immediate crumbs of comfort for hard pressed dairy farmers, it has recognised the current trends within the sector, and expressed concern over retailers increased share of the market price.

“As the Commission furthers its enquiries, we will be reinforcing the findings from our recent publication, the RABDF/NFU Exceptional Costs Survey which highlights the increasing gap of an average 4ppl between the costs of milk production and the price dairy farmers are receiving for their milk, a deficit which is blatantly unsustainable for any business, and leaves no scope for reinvestment purposes.” He adds: “We will also be highlighting the fact that t he average cost of milk production has increased by 11.07% during the last three years, according to the RABDF/NFU report British Milk – What Price 2006 .”