Scottish dairy farmers remain a long way from profitability

Falling milk production across the UK and Europe, a slight lift in dairy commodity auction prices and firmer spot markets for milk have produced the first glimmer of good news for Scottish dairy farmers in almost two years.

However, the vast majority of Scotland’s 950 remaining dairy farmers are a long way from a return to profitability.  That means all milk buyers must waste no time in responding to these positive price signals, and delivering price rises back to farmers.

NFU Scotland will use Scotland’s biggest agricultural event, the Royal Highland Show – which starts at Ingliston near Edinburgh tomorrow (Thursday 23 June) - to push milk processors and retailers on the need to drive milk prices upwards.

Analysts estimate that UK production for April is down 3.5 percent and that production across Europe is declining, with production falls in key dairying nations such as Germany and Ireland. Global and European dairy commodity auctions have shown small but consistent improvements in recent weeks and the spot price for milk in the UK has increased by between 1p and 2p per litre.

However, the majority of Scottish dairy farmers continue to receive a milk price less than 19p per litre with many receiving less than 16p for their milk.

That leaves hard-working Scottish dairy farmers hugely exposed and efficient, family farms under considerable pressure.

NFU Scotland President, Allan Bowie said: ““Let’s be absolutely clear – milk prices have a huge distance to go if they are to return Scottish dairy farmers to profitability and rebuild the damage to confidence in the future for milking cows.

“In these statistics, we have the strongest indication yet that the tide is starting to turn and the UK dairy chain must waste no time in responding through milk price improvements.

“And with supply declining, spot markets lifting and commodity prices firming, traders and processors will be placed under severe pressure from NFU Scotland to respond immediately.  That process will continue at the Highland Show.

“These are the toughest times in the dairy sector in living memory.  If they value their supply, there must be absolutely no delay in milk companies and co-operatives passing any increased value in the chain back to producers.

“That requires all milk purchasers to act responsibly and operate within the Code of Practice set for milk contracts.

“An appalling feature of the current volatile marketplace is the decision taken by some in the supply chain to capitalise on the weak position of farmers, passing on the full consequences of poor markets to their supplying farmers.

“That has seen a minority of irresponsible milk processors drag the sector in a downward spiral, as the more responsible processors are forced to compete. This is not merely about pricing, but wider contract issues and the need for a supply chain that shares risk and reward in a fair and transparent manner and allows farm businesses to plan and invest with some degree of confidence.

“Never has there been a time when farmers should be pressing for better contractual terms so that all share the challenge of volatility and periods of low prices in the future.”  

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Contact Bob Carruth on 0131 472 4006