July 30, 2012

First Milk, Dairy Crest delay price cuts

A postpone over a cut in the price paid to farmers has been agreed between two milk firms on Thursday (July 26), including one of the main buyers from Scottish dairies.

Glasgow-based First Milk said it would withdraw its planned cut in the price of a litre of milk and Dairy Crest said it would suspend the move to reduce what it pays to farmers from August 1. The moves came after farmers planned blockades to halt supplies.

Dairy Crest was the first milk producer to withdraw its price cut, with First Milk following, putting more pressure on other dairy processors to do the same.

"All energy will now be concentrated on the other companies and these protests continue," Farmers For Action, which had the backing of 1,000 Scottish dairies, said in a statement on its website.

Producers have slashed the price they pay farmers for milk this year after seeing the value of cream plummet, with the price paid to farmers being reduced by GBP0.02 (US$0.03) a litre in May.

Further cuts would mean farmers would be paid just under GBP0.25 (US$0.39) a litre for milk - less than the GBP0.30 (US$0.47) a litre it costs to produce it, according to the National Farmers Union.

Dairy Crest said it hopes the two-month delay will allow it to "find a long term solution for the dairy sector".

Kate Allum, chief executive of First Milk, which is one of the main buyers of Scottish milk, said, "This has been a turbulent time for the whole industry.

"However, unless we immediately grasp the nettle, the progress we are seeing right now will be short-lived."

NFU Scotland's Milk Policy Manager George Jamieson said, "All those dairy farmers selling direct to these major processors and not in the position to benefit from a supermarket contract for fresh milk are also looking for processors to show a clear commitment to reinstating prices."