Price negotiations are private and commercial matters in which the Government cannot and should not get involved provided competition law is respected. However, the Government recognise that many farmers are affected by low farmgate prices, particularly in relation to rising production costs. Evidence shows that there is a wide disparity in the costs of production between the most and least efficient dairy farmers. An important part of the challenge, therefore, is for the least efficient producers to identify potential efficiency gains and to work towards decreasing production costs and increasing profitability.
There is widespread acceptance in the dairy sector that improved efficiency is part of the solution to the industry's difficulties along with improvements in innovation and better relationships across the supply chain. Through the Dairy Supply Chain Forum we are encouraging improvements in all these areas. Defra has also awarded a number of substantial grants under the Agriculture Development Scheme to help through, for example, benchmarking.