Various processors commit to price increases – including one to 30ppl

With several milk processors across the UK committing to an increase in the price they pay to producers, including one which has committed to an increase to 30 pence per litre (ppl), NFU Scotland is calling for others to follow suit north of the border.

Autumn 2014 was the last time the milk price rose to 30ppl in Scotland for non-aligned dairy farmers, but this looks set to change.

One company, English-based Barbers, the family cheese company, has committed to increasing its milk price over the coming months to above 30ppl by February 2017. This is a welcome lift in prices, as Barbers’ initiative commits to future prices based on a confidence in the company itself as well as the predicted strength in the market.

Yew Tree, which processes Scottish milk, is offering fixed term price options, which will allow farmers to plan with some certainty.

NFU Scotland welcomes these initiatives, and is calling for more commitment and collaboration from those milk processors in Scotland, or who buy Scottish milk, who are failing to react to the rising market or the drastic need to increase farmers milk cheques.

The Union has consistently pressed all processors to react quickly to the market which has risen dramatically for the last nine months.

Graeme Kilpatrick, Milk Committee Chairman commented: “Farmers have suffered serious losses and inevitably milk production is in serious decline, which will not be reversed quickly.

“Objective and informed market analysts are now confident that the value in dairy products will continue to rise, well into 2017, with future prices indicating that the return to farmers should be 28 to 30 ppl, maybe more.

“There is no excuse for the supply chain to continue to delay price increases to producers. The time lag has been long enough and it is unforgivable and grossly irresponsible to delay commitments to price increases any longer.

“UK cream (£1930 per tonne); cheese (£3200 per tonne) and butter (£3975 per tonne) prices all reflect farm gate prices price of 28 to 30ppl. Given that liquid must compete, then they too should be aspiring to this level of pricing.

“NFU Scotland urges all processors to commit to price increases now and in the months ahead. Going into winter and planning a forward strategy will depend on how processors react now.

“Beyond that we urge the supply chain to reflect on the damage of ‘boom and bust’ which has been exasperated by the inability or will to manage volatility collectively.  Processors must work with their supplying farmers to manage the challenges of global volatility. Crude pricing models, entirely at the discretion of the buyer, abusive contracts terms imposed rather than agreed are unfair and ineffective.

“We need contracts and pricing models that are proactive, collaborative and agreed rather than imposed by processors with no thought to long term efficiency and sustainability of supply.

“NFU Scotland strongly believes that farmers and processors must recognise the huge benefits which effective producer representation can deliver. This, we believe needs to be a priority and there should be no half measures. We believe a registered Dairy Producer Organisation (DPO) is necessary for farmers to be represented legally.

“We firmly believe that farmers groups should be independently run and financed, able to employ professional support experienced in dairy markets and negotiating skills. This would be of great benefit to processors and farmer alike and would go some way to manage the challenges of the supply chain, which the current ‘model’ has patently failed to do.”

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Contact Ruth McClean on 0131 472 4108