Milk purchasers must respond now to rapidly changing market

NFU Scotland is contacting all milk purchasers in Scotland, calling for them to immediately lift prices to producers on the back of a rapidly changing marketplace.

Milk production in GB is almost 11 percent lower now than in the same period last year, leaving the majority of milk purchasers short of supplies and spot prices for milk surging to around 30p per litre.

With most Scottish milk producers still receiving an unsustainable milk price below 20p per litre – and dairy farmers desperately needing to make plans for autumn and winter production -  NFU Scotland believes there is every justification for August and September milk prices to lift by several pennies per litre, and continue rising into the New Year and it will be looking for all milk buyers to deliver on that.

Speaking from Stranraer Show after meeting dairy farmers and a number of milk processors, NFU Scotland’s Milk Committee Chairman Graeme Kilpatrick said: “The last few weeks have seen the market dynamics turned on their head.

“A combination of the dire economics of producing milk and a cool, damp summer has seen production plummet by almost 11 percent year on year.  That has left milk processors short of milk and spot prices approaching 30p per litre.  There is every justification for all milk buyers to be increasing prices right now by several pennies per litre and not just the fractions of pennies that we have seen to date.

“We will be heaping the pressure on milk buyers over the coming weeks, stressing to them that if they want to have security of supply and build a lasting relationship with their producers, then they must be seen to react quickly and appropriately to the changing market.

 “All dairy farmers are currently making plans for autumn and winter production and, without a significant lift in prices, the economics remain dire.  With feed prices rising, and other key input prices static, the cost of production is going up.  

“Producers will be doing their sums.  The European dairy package announced last week, while the detail is still to be finalised, suggests that the supply management aspect does give producers a choice.

“As things stand, the proposal on the table would offer producers a payment for every litre they reduce their production over a three-month period when compared to last year.

“That puts things very much in the hands of processors. If they want milk in the months and years ahead then they must significantly lift prices now.”  

Notes to editors

• According to levy body AHDB Dairy, for the two weeks ending 16/07/2016, GB daily deliveries averaged 31.0m litres/day and were down 10.8% (3.7m litres/day) from the same period in the previous year. Daily deliveries for this period were also 2.2m litres/day (6.7%) lower compared with the 3-year average.

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Contact Bob Carruth on 0131 472 4008