Dairy crisis task force

Calls are being made to assist farmers through milk industry turmoil

The creation of a dairy “task force” to help steer farmers through the gravity of the current milk industry crisis has been proposed by NFU Scotland (NFUS).

The aim is to bring Government, senior bankers, union leaders and consultants together to take shared responsibility for the ongoing crisis.

The union believes all stakeholders have a vested interest in supporting the sector and helping it survive.

The proposal is being considered by the Scottish Government.

“There is no timetable but Government is aware of what we are trying to set up,” an NFUS spokesman said yesterday.

A briefing paper released by the union describes the downturn in milk prices which started in 2014 as going “well beyond normal industry volatility”.

It is widely believed that the decline in prices and margins is likely to continue, unless unforeseen market influences change dramatically.

Prices have fallen from over 30ppl to under 20ppl for many, and as low as 13ppl for some. A few producers are even worse off as they may not have a secure buyer.

Production costs vary but are around 23-28ppl and this week two major buyers – First Milk and Muller – announced further price falls.

Industry leaders are now anticipating even bigger cuts when the “spring flush” of milk comes on stream.

The union has calculated that every 1p per litre drop means an income decrease of £13,000 a year for a dairy farmer.

The briefing paper states that few, if any, producers are turning a profit and given the duration of the downturn and ongoing costs, they are now facing seriously reduced cash flow and net worth.

NFUS makes it clear that processors and retailers could do more to share the risk taking.

“The common risk management is to pass on to producers,” their paper states.

“This is not acceptable, but we are very aware that poor practice is evident. Seldom has there been a situation where processors have had more power over producers and we must challenge these practices to protect producers, now and in the future.”

The paper documents the measures NFUS believe are required to support farmers through the next 12 months. They include: At European level interim remedies, such as specific volume reduction incentives, intervention and longer term market related tools are being investigated.

A fairer structure of risk management through effective producer representation and a strong and widely supported voluntary code of practice is also being sought.

In the meantime farmers are being urged to make use of the Dairy Hub, which offers free, specialised help and knowledge transfer.

The downturn in milk prices has gone “well beyond normal industry volatility”.