Fifth of dairy farmers join EU scheme

Almost a fifth of Scottish dairy farmers have signed up for the EU’s volume reduction scheme which will pay producers the equivalent of 12p for every litre less they produce during September to November when compared to last year.

The Rural Payments Agency has indicated that 1,800 UK farmers are looking to reduce production by 112 million litres this autumn, and that includes 154 Scottish producers who are likely to reduce their production in the months ahead by 15 million litres when compared to last year.

This reduction, combined with a tightening of supply across Europe, is leading to higher spot prices for milk which are now approaching 40p per litre, but farmers, who have had to survive a year when milk prices fell to their lowest point for a generation, have not yet seen the rise fully passed on.

Now NFU Scotland (NFUS) is calling on all milk purchasers in Scotland to immediately recognise the strength of current dairy markets and quickly return Scotland’s dairy farmers to profitable production before winter when the cost of feeding and housing dairy cows escalates.

NFUS milk committee chairman Graeme Kilpatrick said there was every justification, based on commodity prices, production levels and futures prices, for every dairy farmer in Scotland to be getting 25p per litre now, and not in three or four months’ time.

“The price increases announced in recent weeks are welcome but they neither go far enough or fast enough in our opinion and leave almost all producers woefully short of a profitable milk price,” he said.

“All dairy farmers in Scotland are acutely aware of where commodity prices for cheese, butter, cream and powder have shifted to in a matter of a few weeks and the unacceptable delays seen in milk buyers passing the benefits of the price lifts back to their suppliers is creating huge concern and frustration at farmer level.”

Mr Kilpatrick said some milk processors would be sitting on stocks of cheese, butter or powder, made with cheap milk, and were now set to make a windfall on them based on rapidly increasing market prices.

He added that the uptake within Scotland for the European production reduction scheme showed what a perilous place Scottish dairy farmers were in.

“It must act as a wake up call to all milk buyers that almost a fifth of all Scottish producers will take advantage of a European-wide scheme where they will receive 12p for every litre less they produce between September and November this year when compared to last year,” he said.

“Dairy farmers want to produce milk and the only way milk buyers can pull the Scottish dairy sector out of this nosedive is to quickly pay them a profitable price for their milk.”

The Rural Payments Agency has indicated that 1,800 UK farmers are looking to reduce production by 112m litres this autumn.