NFU Scotland has today demanded a milk price rise from all the major companies who purchase milk.

Many of those who process milk claim that the main factor in setting the prices paid to farmers is the demand for lower value products such as milk powder, cream and butter. However, now that prices for these products have risen substantially*, in some cases to a six-year high, the processors have yet to offer a corresponding increase in the prices they pay for milk.

Jim McLaren, NFU Scotland Vice-President, said:

“If the milk market really does work in the way in which the major processors would have us believe, then it’s time that milk producers saw the swinging price cuts introduced this summer put into reverse.

“Milk buyers reduced farmgate milk prices prematurely in anticipation of poorer cream, butter and powder prices but this drop hasn’t occurred. Since early July, butter prices in the UK have gone up by £50 per tonne and skimmed milk powder by £100 per tonne but because many farmgate prices are now set until 2007, processors are reaping all of the benefit and farmers are seeing none.

“The processor Robert Wiseman Dairies, assured its producers, after announcing a price drop effective from 1 August 2006, that they would monitor cream values on an ongoing basis, using Milk Development Council figures as a benchmark. According to the MDC, cream prices have increased in the past two months. If Wiseman Dairies intend to remain true to their word then it’s time that their commitment to paying in accordance with cream prices worked in reverse.

“Arla made a similar justification on milk price cuts based on expectations that powder and butter prices would fall. The reality is that prices are soaring.

“Here is an opportunity for the industry to send out a clear signal that it wishes to participate in a brighter future for milk and dairy products in the UK. This will only happen if the prices paid to farmers start to recognise the huge increase in the costs faced at farm level and allow for investment in the future.

“Given the current market conditions, a significant price increase to dairy farmers is totally justified and failure by the main milk processors to deliver this will speak volumes about their commitment to those supplying them with milk.”

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