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U.K. Farmers Say Shorter Milk Contracts May Stem Losses

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July 17 (Bloomberg) -- U.K. dairy farmers need to be able to negotiate shorter-term milk supply contracts with processors in order to stave off losses, and the government should intervene to support farmers if the two sides can’t come to an agreement, said Mansel Raymond, chairman of the National Farmers Union’s dairy board.

Many U.K. dairy farmers are locked into 12-month supply contracts with processors that have announced cuts in milk payments starting in August, Raymond told Parliament’s environment, food and rural affairs committee today in London. British dairy farmers will lose about 5 pence (8 cents) on every liter (2.1 pints) of milk they produce when the cuts go into effect, said Raymond, who’s also a farmer from Pembrokeshire, Wales.

Dairy Crest Group Plc will allow its farmers to sign three-month contracts, Mike Sheldon, group milk procurement director for the company, told the committee. The move may not ensure profitability for farmers because “it wouldn’t change what’s going on in commodity prices,” he said.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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