NFU Scotland has called on milk purchasers to react quickly to the strengthening markets for milk and dairy products by increasing the prices paid to farmers for their milk.

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The Union made the call as representatives from its Milk Committee visited the headquarters of Arla Foods UK, one of the country’s largest dairy companies. Based in Leeds, Arla Foods UK processes more than two billion litres of milk each year.

Speaking from Leeds, Milk Committee chairman Jimmy Mitchell said:

“The evidence from the marketplace to justify an immediate increase in the farmgate milk price paid to producers is now overwhelming and I call on all milk purchasers to react positively in the coming days and weeks.

“In the last month alone, wholesale butter and cream prices increased by 30 percent and 42 percent respectively and milk powder prices rose by seven percent in the same period. This has not yet been reflected in the prices paid to those producing the milk, with the average UK producer receiving less than 23p per litre of milk, more than 10 percent less than they were being paid at the same time last year.

“In the last few days, the UK’s leading supermarket Tesco has announced that it is to hold the price paid to those farmers who supply it with its fresh liquid milk requirement, paying them more than 27p per litre. While this is an industry-leading price, the Tesco contract is part-based on recognising the costs a dairy farmer incurs when producing milk. These independent costings indicate that the cost of production, at just under 27p per litre, leaves the vast majority of milk purchasers in the UK delivering a price to farmers that is woefully short of what they require.

“Unsurprisingly, confidence levels on dairy farms remain historically low and milk production in the UK continues to run at levels not seen since the early 1970’s. To turn this around, those involved in the dairy chain need to react quickly to the market signals. They need to start moving the milk price to a level that offers dairy farmers a fair return and look for ways in which the whole industry can move to a more sustainable footing in the longer term.”

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