'Greater transparency' call over milk.

Dairy farmers have called for greater transparency throughout the dairy supply chain at a meeting with Defra Secretary of State David Miliband.

During the discussion on the sector's parlous state, All Party Parliamentary Group for Dairy Farmers chairman, Daniel Kawczynski told Mr Miliband that milk producers were making a loss and they wanted to know where the money was going.

He said: "While it is a straight forward process finding out dairy farmer margins ( a joint RABDF and NFU survey has just confirmed producers are losing on average almost 4ppl ( and it is relatively simple to do the same for processors, it is virtually impossible to determine retailer margins."

According to Mr Kawczynski, an inquiry carried out two years ago into milk pricing in the UK concluded that the dairy market was not operating properly and despite its best efforts to determine who took what share of the retail price of a litre of liquid milk, it was unable to account for some 18ppl.

He said: "I am staggered to find that in the meantime no progress has been made.

"I reminded Mr Miliband that the Dairy Supply Chain Forum chaired by farm minister Lord Rooker provides a real opportunity for influence and brings about much needed change and also rationalisation within the industry.

"That rationalisation within the processing sector is desperately needed. However, we did agree the role and the remit of the OFT was not well understood.

"Lack of understanding was frequently being used as a smoke screen to avoid consolidation, when in fact company mergers within other EU states was much more relaxed, as was a fairer split in margin."

Other countries have had the milk price regulated or at least indexed. For example, France, Germany and Holland have partial indexation, while in Ireland the co-ops use contract formulae and an independent price audit.

Mr Kawczynski added: "We also brought him up to speed with the Irish government's latest move to support its dairy processing sector with match funding for pounds 300m of European support.

"We indicated that this was another prime example of a non-level playing field and a lack of common approach to the funding of a scheme designed to support sustainability objectives.

"We believe that this massive injection of capital into the Irish processing sector will seriously impact on our marketplace, in particular pressure from imports of cheap Cheddar cheese."

Tim Brigstocke, chairman of RABDF, which delivers the APPG's secretariat, said: "David Miliband expressed a measure of genuine concern for dairy producers and their future. "