The Courier & Advertiser (Fife Edition)
Dairy farming industry ‘being short-changed’ by milk buyers
MARKET: Producer prices have been rising but they still lag spot prices
Milk buyers have been accused of shortchanging and letting down the dairy farming industry during the current strengthening milk market.
Producer prices have been rising in recent months and according to listed prices, milk buyer Muller is taking its headline figure for November to 30.5ppl, First Milk in Scotland are to pay 28.59ppl in October, Arla is paying just over 31ppl, Lactalis 28.5ppl and Grahams 29.75ppl.
However, spot prices for milk now stand at 40ppl or more and NFUS say the current strength in dairy markets, combined with market indicators, are not being reflected in the prices dairy farmers are being offered.
The union’s milk committee members yesterday called on buyers to develop better contracts and pricing models and work to restore confidence before more dairy farmers give up.
NFU Scotland vice-president Gary Mitchell, a dairy farmer near Stranraer, said retailer domination and the liquid milk market continued to starve the industry of much-needed cash. “That is hugely frustrating,” he said. “With a difficult summer to graze cows, make forage and harvest grain, winter milk production will not come cheap so scaremongering about over-production is the least of anyone’s worries,” he said.
“We need to see prices from the processors and retailers that are a true reflection of where the market is for milk and dairy products to try and build some confidence for our dairy farmers, who continue to be let down by their buyers.”
The union’s milk policy manager, George Jamieson, said market indicators for milk powder, cheese and butter had more than doubled from the lows of summer last year to 40ppl in late summer this year.
“These are record highs for market indicators but they are some considerable distance from being reflected in record highs at the farmgate,” he said.
“AHDB Dairy costings indicate that for the top 25 per cent of dairy producers, their cost of production is 26.8ppl.
“It also tells us the average milk price over five years is 27.5ppl. It is crystal clear producers need significantly more from the supply chain if they are to continue to make the necessary investment in their business in years to come.
“We need a genuine effort to tackle low prices and volatility. The market indicators, given that they track commodity prices and not ‘added value’ fresh milk, are clearly not being reflected in farm gate prices.”