Milk buyers failing to pass on market returns, says union

A growing discrepancy between soaring dairy commodity values and low prices paid for the raw product is leading to anger and frustration on farms.

NFU Scotland (NFUS) warned yesterday that dairy farmers’ patience is wearing thin as they see wholesale commodity prices for butter, skimmed milk powder, mild cheese and cheese by-products soar from a low of 17p per litre a year ago to almost 37p now.

By comparison farm gate prices have risen by only 7p in the same period to an average of 26-27p per litre.

NFUS milk committee chairman James Rankin said there was no reasonable excuse for the discrepancy.

“By anyone’s arithmetic, this does not add up,” he said.

“Milk buyers failing to pass on market returns is clearly unacceptable in any circumstance, but particularly at a time when dairy farmers are recovering from the deepest price squeeze many have ever experienced.

“Production is muted, demand is strong and while the processing and retail sectors can cite concerns about oversupply and being competitive, there is no reason to hold back prices at this time, other than to manage their balance sheets and risk at the expense of farmers.”

Mr Rankin added that NFUS were open and willing to work with the dairy supply chain to manage risk and opportunity.

He said: “We acknowledge that volume management and market competitiveness are real issues, but we are very concerned that farmers are once again not being fairly or respectfully treated in terms of receiving a reasonable reward from such a strong market.”

Demand for milk is high.