Huge Milk Cut Sends Scottish Dairy Reeling

UK - Dairy farmers in Scotland have been hit with the news that the country’s largest milk processor, Robert Wiseman Dairies, is cutting the price it pays to its farmers by 2.2 pence per litre.
calendar icon 27 January 2009
clock icon 2 minute read

Although a number of milk processors in GB have announced price changes in recent weeks, the Wisemans cut is the largest to date.

NFU Scotland President, Jim McLaren said:

"Price cuts for dairy farmers at a time when milk production in the country is at a 40 year low is an astonishing state of affairs and one which the general public will find hard to comprehend.

"Those companies, like Wisemans, that are providing a growing volume of fresh, liquid milk to consumers are supplying a healthy, profitable sector which is largely isolated from volatility experienced by lower value dairy products around the world. While the demand for skimmed and semi-skimmed milks continues to grow, disposing of the surplus cream may be an issue for companies such as Wisemans but we remain unconvinced that weakened cream markets alone can be held responsible for milk price cuts on this scale.

"The three milk processors responsible for supplying all GB’s major supermarkets – Wisemans, Arla and Dairy Crest – have all now cut their milk prices to farmers in the past few weeks. The major supermarkets have all gone some way in recent years to secure their supplies of fresh milk by entering into arrangements with groups of farmers. It is time for those supermarkets to stand by their commitments and ensure that those farmers supplying them with liquid milk are receiving a truly sustainable price.

"For others, there is no escaping the fact that prices for dairy commodities such as mild cheese, butter and milk powders have collapsed at European and world levels and several of the GB companies that have announced milk price cuts to date are exposed to these markets. The strength of the Euro against sterling is assisting exports of the UK-made products, limiting imports and insulating companies from the worst of these pressures. We must hope that, in the short term, currency continues to work in our favour.

"In the medium to longer term, this latest price cut announcement must not be used as an excuse for further tit-for-tat price cuts amongst processors. The Wisemans announcement must draw a line under this round of price cuts, the farmgate price must be allowed to stabilise and we are adamant that the next move in farmgate milk prices must be upwards."

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