Dark Day for Scottish Dairy Farmers

First Milk cut prices again with Island of Bute worst affected

Scottish dairy farmers supplying the farmer-owned business First Milk have been dealt a further blow with the announcement that prices are to be cut once again.

Faced with exposure to falling commodity values, the firm has been forced to cut prices on a number of occasions in recent months. The majority of Scottish suppliers to First Milk are to see prices cut by a further 0.2p per litre for June while those on the Island of Bute will see prices cut by 1.2p per litre.  For those on Bute, it is likely that – after deductions are made for capital contributions to First Milk – their milk price will be around 16p per litre.

The cuts were announced as part of a wholesale business review, revealed by new Chief Executive Mike Gallacher, aimed at turning around the company’s fortunes. The business plan included cost reductions across First Milk, including potential job losses primarily at its Glasgow head office; a change to milk pricing policy and sales refocused on UK contracts.

The milk pricing changes will see First Milk move away from a liquid or manufacturing price paid to members depending on its end use, regardless of where the member was located in the UK.  Instead, a member will now be allocated to one of seven milk pools and their price based on the net commercial returns from First Milk’s own manufacturing sites and its customers.  As a result, First Milk members supplying Haverfordwest in Wales or the Lake District creamery in Cumbria will receive a standard litre price before any deductions of 21.17p while the standard litre price before deductions for Scottish First Milk producers will be: Mainland Scotland – 20.3p; Campbeltown – 20.67p; Arran – 20.67p and Bute – 19.3p.

The price for producers on Bute has been most severely affected due to the costs associated with transporting milk off the island.  NFU Scotland and First Milk have been pressing Scottish Government to extend existing subsidised ferry transport to milk tankers and a meeting with Transport Minister Derek MacKay will be held in the Scottish Parliament later this month.

Previous responses from Scottish Government indicated that ferry transport support would not be reviewed until September but NFUS believes this latest price crash makes a decision on subsidised transport hugely important to the survival of milk production on the island.

Following correspondence with the company today, NFU Scotland understands that a First Milk director will be on the Isle of Bute tomorrow (Saturday 2 May) to meet with the island’s dairy farmers.

After a telephone discussion with First Milk CEO Mike Gallacher, NFU Scotland President Allan Bowie said: “We can appreciate that restructuring and turning around a business often means pain, but for Scottish dairy farmers supplying First Milk these further cuts will place them in a hugely difficult position.

“We know that a number of First Milk members have already taken the difficult decision to walk away from milk production and those that remain have some challenging business decisions to make.

“Given that this is a co-operative, it will rankle with many Scottish producers the price differential now opening up between those supplying different parts of the First Milk business.  Many Scottish First Milk suppliers are staunch, lifelong supporters of co-operation, with an expectation that pain and gain should be shared.

“For Kintyre and Bute, where dairying is a huge part of the local economy, First Milk has put a taskforce in place to support the Campbeltown creamery in the coming months and drive forward the marketing of Mull of Kintyre cheddar.   That part of the business plan must be given an appropriate time to bed in and also allow the planned improvements to the creamery to be completed.

“For those on Bute, these savage cuts have simply strengthened our resolve to have Scottish Government support ferry transport costs immediately, rather than holding off for a review in the autumn.  We hope the transport minister has an appropriate response when we meet in Holyrood.

“The Union is also meeting Mr Gallacher later this month and we welcome the opportunity to discuss his turnaround plan, and its implications for Scottish producers, face-to-face.”   


Contact Bob Carruth on 0131 472 4006

Date Published:

News Article No.: 79/15

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