Union calls for sta­bil­ity as milk prices fal­ter

The Oban Times - - Farming -

NFU Scot­land has called for milk buy­ers to de­liver sta­bil­ity to Scot­tish dairy farm­ers as far­m­gate prices come un­der pres­sure.

Mar­ket sig­nals around com­mod­ity prices, pro­duc­tion at world and EU lev­els and global dairy auc­tion, re­sults are all pos­i­tive and the union is keen that milk buy­ers give a strong sign to their sup­pli­ers that any price cuts now should only be tem­po­rary.

This week saw farmer- owned busi­ness First Milk re­duce prices to its mem­bers by be­tween 0.1p and 0.35p per litre – the com­pany’s first price cut since last sum­mer.

NFU Scot­land’s milk pol­icy man­ager Ge­orge Jamieson said: ‘The dairy mar­ket is very finely bal­anced, with global and re­gional milk buy­ers wait­ing to see how sup­ply and de­mand bal­ance out go­ing for­ward.

‘All parts of the dairy chain are watch­ing the mar­ket but, given the very se­ri­ous dent in pro­duc­ers’ cash flow, net worth and con­fi­dence suf­fered over the past two years, the re­sponse of pro­ces­sors and re­tail­ers now is cru­cial.

‘Strong sig­nals and a clear com­mit­ment to de­liver a fairer share of the re­wards from dairy mar­kets are what is needed. But­ter and cream prices re­main strong and the cheese trade is only marginally down. High stocks of pow­der are af­fect­ing skimmed milk prices but across the board there are few driv­ers for dras­tic price change.

‘While the mar­ket has weak­ened slightly in re­cent months, dairy fu­tures and the global dairy auc­tion – up 3.5 per­cent this week – are all sug­gest­ing that milk val­ues should at least hold.

‘That op­ti­mism is un­der­pinned by solid fore­casts for dairy prod­ucts, in­clud­ing an ex­pected in­crease in de­mand from China, and ques­tion marks over sup­ply in some ma­jor milk re­gions.

‘ The recog­nised UK dairy mar­ket in­di­ca­tors – Ac­tual Milk Price Equiv­a­lent (AMPE) and Milk for Cheese Equiv­a­lent ( MCVE) – have dropped but only marginally. That is en­cour­ag­ing for this time of year as we ap­proach peak pro­duc­tion. With AMPE sit­ting at 27.7p per litre (- 0.1ppl) and MCVE at 31.8p per litre (- 0.35ppl), far­m­gate prices should be around 27.5p per litre de­pend­ing on the end use for that farm­ers’ milk.

‘First Milk’s an­nounce­ment that it is to re­duce its milk prices to mem­bers re­flects the mar­kets it is in and its board’s pol­icy to pay a price that is based on re­turns month on month. Af­ter a very dif­fi­cult time, when First Milk’s prices lagged well be­hind com­peti­tors, much needed progress had raised mem­bers’ prices to a more com­pet­i­tive level.

‘First Milk’s re­cov­ery, ra­tio­nal­i­sa­tion and stream­lin­ing has been achieved to a large ex­tent by the poor prices that its farm­ing mem­bers have had to with­stand over a pro­longed pe­riod.

‘We know that the new CEO at First Milk, She­lagh Han­cock, is keen to add more value where pos­si­ble. This will be im­por­tant if mem­bers’ prices are to as­pire to higher lev­els rel­a­tive to com­peti­tors. NFUS has met with She­lagh and will meet again shortly to dis­cuss how we can work to­gether for the ben­e­fit of Scot­tish First Milk mem­bers.’

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