Union welcomes price changes and says 30ppl for milk is achievable as markets strengthen
NFU SCOTLAND has welcomed positive milk price moves in recent weeks and believes that commodity prices indicate a farm-gate price of 30p per litre (ppl) is achievable.
The farmer-owned co-operative First Milk announced a milk price increase of 1.2ppl for July taking its price on a liquid standard litre to 27.2p, while the manufacturing standard litre will be 28.12p. That move follows other recent price increases from Muller and Arla that reflect the strengthening seen in all dairy commodity prices.
Speaking from Paisley on Tuesday following a visit by NFUS’ milk committee to First Milk’s HQ, chairman John Smith, a dairy farmer from Campbeltown, said: “We believe a farm-gate price of 30ppl is achievable. It is essential all parts of the supply chain ensure strengthening markets are reflected quickly in prices.
“There are many different milk contracts out there and achieving all the quality and production bonuses will be a challenge for some, but the tone of the market is changing. More increases must follow as futures markets and physical sales of commodities are both positive.
“All processors must take this opportunity to build trust in their pricing models by increasing farmgate prices at a pace and magnitude that reflects where the market is.”
Mr Smith went on: “Key price indicators, the actual milk price equivalent (AMPE) and milk for cheese value equivalent (MCVE) now sit at an average of more than
33ppl. Prices for milk powders, butter and cream are all up by more than 10 per cent in the past month.
“That justifies price increases that would allow dairy farmers to rebuild their balance sheets after a difficult period of poor prices and higher costs due to a difficult winter.”
At the meeting in Paisley the committee discussed the need for a more open dialogue with milk buyers on Red Tractor standards and the prospect of legislation on dairy contracts, after the Department for Environment Food and Rural Affairs accepted a recommendation from the grocery code adjudicator that dairy farmers are disadvantaged by an imbalance of power from the dairy supply chain.
Milk policy manager George Jamieson said: “NFUS and our fellow UK unions are clear we see this as a massive opportunity for the entire dairy supply chain to develop an agreement on contracts that build trust, fairness and efficiency, resolving the key factors of pricing, volume and volatility.”
Market round-up
LAWRIE & Symington had 160 store cattle forward in Lanark on Tuesday when heifers sold to 255p per kg and averaged 224.6p
(+5.5p on the fortnight), while bullocks peaked at 259p and levelled at 233.9p (+4.2p).