Pressure Mounts For Milk Price Rise
18/01/05

NFU Scotland has written to all the major supermarkets, milk processors and co-operatives as pressure mounts for recognition of the increased costs dairy farmers have faced over the last two years.

NFUS, together with Farmers for Action and the NFU, has been in contact with the major players in the dairy industry over the Christmas and New Year period stressing that the gap between the milk price and cost of production must be closed if irreparable damage to the industry is to be avoided.

Verbal commitments have been secured from all the major supermarkets and processors that the milk price must reflect more fairly milk production costs. A number of papers have been produced that clearly demonstrate an increase in on-farm costs of around 1.6 pence per litre over the last two years, during which time the milk price has failed to move upwards to reflect this.

NFUS President John Kinnaird said:

"I've written to all the main players in the milk market to ensure the momentum for this fully justified price increase is maintained. It is now time for supermarkets and processors to show that their warm words of support at the end of the year were not just an attempt to get passed the Christmas pressure point.

"There is clear evidence that our dairy members have faced significantly increased costs over the last two years. In particular, costs connected with the energy market have hit hard with increased fertiliser* and fuel prices** having a significant impact.

"This is not another retail initiative, rather justifiable cost recovery from the producer's perspective. From past experience, we are acutely aware of the difficulties in ensuring these justified price rises actually happen across all milk and dairy products regardless of customer. We are prepared to work in confidence with those encountering difficulties in securing a fair deal. However, we are still willing to identify those who fail to deliver a fair return or who attempt to capitalise, at the expense of farmers, from any general market improvement.

"Our long-term goal remains the development of more positive relationships in the UK dairy chain, and to that end I welcome Don Curry's recognition of our case for a strengthened Supermarket Code of Practice. However, until we reach that point, we expect all those involved in the production and retail of milk and dairy products to play a full part in delivering the justified price increase in farm gate milk prices."

NFU Scotland President John Kinnaird has written to Asda, Morrisons, Sainbury, Tesco, Marks & Spencer, Robert Wiseman Dairies, Arla Foods, Dairy Crest, First Milk, Dairy Farmers of Britain and Milk Link. · *As an example of increased costs for dairy farmers, the Milk Development Council figures show that fertiliser prices have risen by over 30 per cent in the last two years. In December 2002, the average cost of Blended 20.10.10 fertiliser was £106 per tonne. By December 2004, this had risen to £141 per tonne, significantly increasing production costs. · **In the last year alone, red diesel prices have also risen by around 30 per cent from 23 pence per litre to nearly 30 pence per litre.