Ministers urged to act in milk price row

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The Independent Online

The Government may be dragged into a row between farmers and Britain's leading dairy companies over milk and cheese prices after a farming activist who made his name during the fuel protests called for Whitehall to intervene.

David Handley, a veteran of the petrol campaign that sparked panic in Downing Street three years ago, last night called for a new regulatory board to front the increasingly fraught negotiations between the farmers, the milk processors and the food retailers. "We have seen chaos ever since the milk market was deregulated 10 years ago," Mr Handley said.

His comments come as Dairy Crest, Britain's biggest processor, faces a fresh mauling from the supermarket groups Tesco and Asda in two separate meetings today to explain why it is not passing agreed price rises back to farmers. At issue is an extra 2p on a litre of milk, which the major food retailers have promised to pay on condition that it is handed back to the dairy farmers in full.

The supermarket groups - cast in a rare, favourable light - are furious they have been dragged back on to the protest map despite taking the initiative on the price increases. Farmers for Action (FFA), the controversial pressure group headed by Mr Handley, organised 1,300 dairy farmers to picket three of Asda's depots last week. The US-owned retailer gave Dairy Crest the weekend to give way on several issues after what sources described as "a challenging" meeting last Thursday. Asda, whose parent company Wal-Mart is no pushover when it comes to suppliers, is also meeting FFA this morning.

A Tesco spokesman confirmed that the retailer had recently agreed to pay an extra £200 per tonne for milk used to make cheese. "We are encouraging the processors to pass this on in full," he said. There are glimmers of progress: two weeks ago Associated Co-operative Creamery, part of Co-operative Wholesale Society, agreed a 2p per litre price rise.

Mr Handley said the current impasse with the processors was "the worst in five years", adding: "The farmers' anger is like I've never seen it before." He threatened yet more pickets at the milk processors' and food retailers' depots across the UK if today's meetings fail to break the current stalemate. "I can see this being a long and protracted situation. My only hope is that we drag the Government back in."

Albert Owen, the Labour MP for Anglesey, has already called an early-day motion on milk prices and will spearhead a debate on the dairy industry tomorrow afternoon.

A Dairy Crest spokesman said: "We are already the leading payer. We can't keep increasing the prices we pay to farmers. What is required is price rises from the retailers."