Farmers: 'It was the price rise that never was for us'

Dairy farmer Michael Bootham remembers how pleased he was when he heard, five years ago, that the supermarkets would pay extra money to help the hard-pressed industry recover from foot-and-mouth.

Yesterday, though, he was none the wiser about the money he was supposed to receive, or why the current milk price barely covers his costs while the stores' share for selling his product had soared during the past 10 years.

Despite a gruelling day with no hired hands and no days off the 70-year-old widower and his son can only afford second-hand tractors and other cheap equipment to manage their herd of Friesian-Holstein cows at Grange Farm, at Middleton, near Ilkley in west Yorkshire.

The farm has a contract to supply milk to the dairy company Arla under a deal designating him a supplier to Asda. The milk he sells to the dairy for 24p a litre is priced up to 82p by the time it reaches the shelves.

Back in 2002, Mr Bootham was supplying Arla, though without the direct link to Asda. Times were hard; Grange Farm had been shut for months the previous summer because of a nearby foot- and-mouth outbreak.

The supermarkets were making a big show of paying more for their milk, in an act of solidarity with the struggling farmers but what happened to the money?

"I've been looking through my old milk cheques for that period and, between August and December 2003, we got half a penny a litre more. There was nothing noticeable," he said.

"When we read about it in the newspapers we thought: 'Great' milk's going up by 5p for the hard-pressed farmers. And then nothing happened. We got about 0.5p in the end. It was the price rise that never was.

"The OFT should be looking at where the money went because it didn't go to the farmer."

Farming has been in the Bootham family for generations; Mr Bootham's father was a dairy farmer, and his grandfather before him. When the chance came to move from being a tenant farmer to owning the farm in 1995, Mr Bootham jumped at the chance. Milk prices, at about 25p, were buoyant. But increasing milk yields led to over-supply and the competitive stance of the chain stores was exerting greater pressure on the dairies. They, in turn, squeezed the farmers.

About half of dairy farmers have gone out of business since he bought the farm. In 1995, there were 28,000 by the end of 2006, there were 13,000.

In recent months, the burgeoning global demand for milk products has forced the price back up to 24p. Retailers say the law of supply and demand is working. The Government, too, agrees that the setting of prices is a "commercial matter" which must take place within the bounds of competition law.

Mr Bootham would like that competition to be a little fairer. "We accept the people who have to process and develop our product need to have a profit. And the supermarkets need a profit as well. But the profits are not being fairly distributed."