July 11, 2012

 

Scotland's dairy farmers express desperation over milk price cuts

 

 

Amid warnings from farmers' leaders, Scotland's dairy farmers Monday (July 9) unleashed anger over milk price cuts at a mass rally, the writing is on the wall for some of their livelihoods.

 

More than 300 of the country's 1,100 milk producers took part in the meeting at Lanark market organised by National Farmers Union Scotland (NFUS) over the crisis facing the milk industry caused by cuts of up to GBP0.02 (US$0.03) per litre imposed since April.

 

It came amid warnings that, with further cuts looming from August 1, a typical farmer is on course to make an annual loss of at least GBP60,000 (US$93,000).

 

The problem has arisen as a result of overproduction, at a time when supermarkets are heavily discounting milk to win their war at the tills, and the collapse of the price of cream.

 

NFUS vice-president Allan Bowie said, "The writing is on the wall for some and they will either have to stop producing milk or go out of business."

 

NFUS president Nigel Miller, who promised a co-ordinated campaign, said the industry was at a crossroads and legislation may be required from the UK Coalition, the Scottish Government or both.

 

He added, "There is no mistaking the sense of crisis among milk producers. Recent price cuts have stripped millions of pounds out of dairy farmers' businesses and created anger, frustration and fear for the future."

 

From next month, most dairy farmers will receive around GBP0.25 (US$0.39) per litre of milk at a time when independent analysts estimate the cost of production is now in excess of GBP0.30 (US$0.47) per litre.

 

Most milk contracts favour processors who have responded to the weak market by cutting the prices they pay for their milk safe in the knowledge many have to give at least six months' notice to terminate contracts. Dairy farmer Ronnie Wilson, from Castle Douglas in Dumfries and Galloway, said, "The main problem is that we are price takers."

 

Three years ago Wilson led a group of a dozen large milk producers in his area who resigned from their contracts with Robert Wiseman Dairies and tried to use their combined production to secure a better deal elsewhere. The group failed because it didn't have enough negotiating power.

 

Two options were presented to dairy farmers at Monday's (July 9) meeting - form a co-operative or a producer organisation (PO). Co-ops process milk but POs simply act as brokers and use large volumes of milk to give increased negotiating power. An overwhelming vote opted to form a PO while another vote backed the union to fight for legislation for compulsory and equitable contracts.

 

NFU Scotland Milk Committee chairman Gary Mitchell said, "Tuesday's (July 10) meeting has brought together dairy farmers and NFUS to demonstrate our commitment to a dairy industry that we believe should be the norm: one in which dairy farmers are paid enough to produce the milk, cheese, cream and other consumer staples that we know people want to buy."

 

Around 1,500 UK dairy farmers will attend a demonstration in London Wednesday (July 11).