Page last updated at 13:42 GMT, Monday, 8 December 2008

Organic farmer 'may lose 70,000'

Cows on Eweleaze farm in Martinstown, Dorset
Noel Marsh spent thousands on a new organic standard cow shed

A farmer from Dorset claims he will lose 70,000 because a dairy firm cut the price it pays for his organic milk.

Noel Marsh, of Eweleaze Farm in Martinstown, near Dorchester, had the price he is paid for a litre by Dairy Crest cut by four pence from December.

The National Farmers' Union (NFU) said the decision was disastrous for organic milk producers across the region.

Dairy Crest blamed it on fewer people buying the more expensive organic products during the economic downturn.

Mr Marsh and his wife Amanda spent thousands of pounds on building a new cowshed as part of his farm's organic conversion.

We cannot continue to absorb the associated costs of selling higher-priced organic milk at standard prices
Dairy Crest statement

He said they thought it would be worth it because at the time, Dairy Crest's organic arm was recruiting farms like their's, but now they have told him they will pay him less.

Mr Marsh said they had been caught in a "Catch 22 situation".

If they dropped their organic status, they would have to pay back a 120,000 subsidy.

However, they said the price drop would cost them 70,000.

The farmer said there was nothing he could do and other farmers could be in the same situation.

Mr Marsh said: "It's going to wipe out most of our profit and that would obviously make things very tough for us."

'Very gung-ho'

The NFU said Dairy Crest should have predicted the changing market and that the cut could put some organic dairies out of business.

Noel Marsh
Noel Marsh said he was told about the oversupply issue in October

Ian Johnson, from the NFU, said: "They've catastrophically misread the market.

"They were very gung-ho in terms of recruitment. These farmers have now gone to considerable time, expense and investment to prepare for that.

"Now they're going to have a huge cut in the price of their milk against the trend and when their overheads and expenses are going up hugely.

"It's a disaster."

In a statement, Dairy Crest said: "The credit crunch is clearly taking its toll and consumers are changing their purchasing habits and moving away from higher cost goods.

"This has left us with an over-supply of organic milk, which in turn has forced us to reduce the price we pay supplying farmers.

"We appreciate that this is not welcome news for our organic suppliers but we cannot continue to absorb the associated costs of selling higher-priced organic milk at standard prices.

"However, we have agreed that we will cap any reduction in price paid to our farmers at around 10%.

"We continue to work with our suppliers to find solutions to the current trading difficulties."

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