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Union Calls for Strong Milk Price Message in New Year

NFU Scotland is adamant that the milk price rises seen in the last six months of 2011 must provide a platform for further price improvements in 2012.

The Union maintains that the price rises seen in 2011 were slow in being delivered, lagged significantly behind the buoyant commodity markets for milk and dairy products and that continued market strength suggests that there is every justification for further price increases back to the farmgate in the New Year.

NFU Scotland’s Milk Policy Manager, George Jamieson said:

“It is a huge disappointment that some liquid milk processors are looking to use a slight weakening in global and UK commodity values as justification for talking down the milk price when we should be building on the huge positives that exist in the market for milk and dairy products.

“Some commodity prices have weakened, but from a very high level.   Already there are signs that the global situation has stabilised, with both November auctions, carried out by the New Zealand dairy giant Fonterra showing improvements. In the UK, powder and cheddar prices are stable, and although butter and cream prices have fallen, they remain at levels substantially above those seen 18 months ago.

“NFU Scotland’s own pricing formula, based on commodity values, is currently pricing milk at 32.64p per litre.  Allowing 1.5p per litre for transport costs, we estimate that producers deserve more than 31p - that is 3p per litre above the average price that farmers are actually receiving. 

“Plenty of scope exists for further price rises and while we can sympathise with liquid processors over the damaging pressure that retailers are placing on them, we are adamant that producers must not be used as the safety valve once again.

“Today (Tuesday, 13 December) saw the farmer owned businesses First Milk and Milk Link make a timely commitment to their members.  First Milk is to deliver a further dividend to its farmers and Milk Link has committed to at least maintain its current prices until 1 April 2012.  Holding price is significant in that it allows farmers to plan for the winter. It should also be seen as warning shot to any milk buyer contemplating lowering prices

“There is genuine competition for the now declining volume of UK milk and farmers are well aware of this.  In areas where milk producers have a choice of milk buyer, that level of competition should, in itself, be a driver for price.” 

Notes to editors

  • Milk Link Board has written to its members confirming that it expects to maintain the member milk price until at least 1 April 2012.
  • First Milk will pay out a 3 per cent return on members’ capital in January linked to business performance in the six months to the end of September 2011. This is the third time in 18 months that it has paid out a return on members’ capital, worth more than £1800 to an average First Milk member.

Ends

Contact Bob Carruth on 0131 472 4006

Date Published:

News Article No.: 194/11


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