Union Backs Immediate Milk Price Increase as Production Hits 40-Year Low

NFU Scotland believes an immediate milk price increase to dairy farmers is wholly justified and has opened fresh discussions with milk purchasers in the past week in an effort to achieve a better return for milk producers.

According to the Union, a combination of low supply and strengthening markets for milk and dairy products make it imperative that milk purchasers share their improving returns with those producing the milk on the farm.

Total milk production in the UK has fallen for six consecutive years and is now at a level last seen in the early 1970’s.   On the up side, figures show that consumption of fresh milk is increasing and wholesale prices for cheddar; butter and cream are picking up.   The improvement in the fortunes of the dairy sector have also been reflected in the healthier financial figures reported recently by major milk processors such as Robert Wiseman Dairies and Dairy Crest but have not filtered through to farm level.

NFU Scotland Milk Committee Chairman, Jimmy Mitchell said:

“There is now a lengthy list of reasons that justify an immediate uplift in the prices currently being paid to farmers for their milk.  Milk production in the UK is at its lowest point for a generation but the demand for fresh milk, cheddar and other dairy products is growing.

“Our assessment of the current market conditions is that there is no reason for milk prices to remain static and that an uplift in farmgate prices is already overdue.   If milk processors don’t believe a price increase is imminent, then we need to know why and they have a duty to inform their suppliers as to why that would be the case.

“What is clear is that several major processors are currently enjoying better returns and we believe that a fair share should be delivered immediately to those on the ground producing the milk if those dairy farmers are to have a renewed confidence in the future.

“Confidence is a key factor for dairy farmers and that confidence is largely driven by profitability.  Unfortunately, the reality for a majority of Scottish dairy farmers is that profitability is some way off as they continue to receive a milk price that is significantly below the true costs associated with producing that milk.  

“The average cost of producing milk on farm, according to the independent analyst Promar, is put at 26.4p per litre. Very few producers receive anything like this price for their milk. The average UK milk price paid to farmers in January was around 24p, but many are being paid as little as 20p or 21p.   That is not sustainable and, in our opinion, is no longer justifiable.” 

Notes to Editors

  • Provisional data on milk production for March shows that UK milk deliveries rose by 136m litres (13.9%) from February to 1,114m litres in March. Milk deliveries start to rise from February as we head towards the seasonal peak in milk production. Annual comparisons show a fall in deliveries in March of 0.7% (8m litres) when compared to 2009. In the UK in 2009/10 milk deliveries fell by 39 million litres (0.3%) to 12,819m litres. UK milk deliveries have fallen for the past six years and the 2009/10 saw a new low.  Milk production in 2008/09 was the lowest since the early 1970’s.
  • The latest UK wholesale prices for dairy products, as published by DairyCo, are as follows and show significant increases across most products.

£ per tonne


Mar 2010

1 month before

12 months before

Butter (Unsalted)










Mild Cheddar





Mature Cheddar





Bulk Cream





Source: DIN Consultancy





  • The better wholesale markets for cheese, butter, cream and milk powders are not exclusive to Great Britain but backed by the surge in prices paid at recent auctions held in Northern Ireland, the Netherlands and key world player, New Zealand. 
  • According to DairyCo, total annual fresh milk sales to consumers stood at 5.0 billion litres during the year ending 21/03/10, an increase of 33.0m litres (0.7%) compared with the previous year. Total cheddar sales in the UK increased by 4.4% in the 52 weeks ending 27 December 2009, when compared to the same period in 2008. Total cheddar volumes now stand at 214,927 tonnes.  Together, fresh milk and cheese sales account for almost three-quarters of all the milk produced in the UK.


Contact Bob Carruth on 0131 472 4006


Date Published:

News Article No.: 65/10

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