FARMERS want 6p per litre more for their milk.

They say the rise is needed to catch up with inflation and restore confidence to the industry to encourage investment. ‘It is asking a lot, we know, but we, as much as anyone, would hope it would not go onto the retail price,’ said Guernsey Farmers’ Association spokesman James Watts.

The Commerce and Employment Department last week named the three members who will sit on the milk price review panel. The States agreed to the formation of the independent body during the April debate on reforms to the dairy industry.

In 2000, farmers were receiving 40p per litre for their milk. The States agreed a £2m. annual environment payment, over five years, to the industry from 2001 on condition that production was cut by 20%.

It meant farmers got 25p per litre for their milk plus a further 25p supplement if they met certain criteria. Currently, they get 27p from Commerce and Employment (milk) and a further 25p from Treasury and Resources (environment payment), but there has been no rise for three years.

‘You don’t need to be a genius to work out that this has not kept up with inflation,’ said Mr Watts.

He said the £2m. environment payment had been eroded significantly in real terms since 2001.

Farmers are basing 4p of the requested rise on historical price increases and the failure to keep pace with inflation. Another 1p is for a 10% hike in feed costs. The final penny is to defray charges, set to be imposed, for farm services such as artificial insemination.

Mr Watts said things had moved on since the April States debate when the House agreed to continue with the £2m. subsidy.

‘Commerce and Employment led us to believe that there was no more money in the pot and that we should be grateful if the subsidy continued at the same rate,’ he said.

‘But I think the board and ourselves were pleasantly surprised and encouraged by the level of support we got from States members during the debate. It was clear that there might be a possibility of that £2m. being increased.’

Mr Watts hoped the price increase would not be reflected in the retail price of milk. If the money could not be found via the retail sector, it might be necessary to ask the States to increase the environment payment, but that would be something for the board to decide.

‘I can understand ‘Commerce and Employment minister’ Stuart Falla’s reluctance to increase the retail price of milk due to the risk of encouraging importation.

‘But we believe milk prices in the UK will rise, meaning the differential will stay the same.’

Mr Watts said farmers were supportive of the introduction of the panel.

‘It makes more sense to leave milk pricing in the hands of an independent panel rather than one of the major stakeholders, namely Commerce and Employment, which operates the Dairy.’

He believes it could take several months for the panel to assess the full position and said Commerce and Employment had suggested an interim increase could be made.

The retail price of milk is currently set at 70p per litre. Plans to increase it to 75p earlier this year were scrapped because a rise before the panel had been set up was deemed inappropriate.