Dairy Optimism Needs to be Reflected in Returns

SCOTLAND, UK - Growing optimism in the dairy sector must quickly result in better returns to Scottish dairy farmers according to NFU Scotland.
calendar icon 20 August 2009
clock icon 3 minute read

A number of reports are suggesting growing demand for fresh milk and dairy products at home in the UK at the same time as world trade for commodities such as milk powders and butter starts to lift. NFUS has a busy few months coming up at which it will sit down with politicians, milk processors and major retailers and a speedy return to fair farmgate prices for milk will be top of the agenda.

Earlier this month, major milk processor Robert Wiseman Dairies announced a small increase in the price it pays to its farmer suppliers. There is now a justifiable expectation at farm level that all milk purchasers should be following suit.

NFU Scotland’s Milk Committee Chairman, Jimmy Mitchell said:

“On the back of growing consumer demand for milk and cheese, underpinned by a resurgence in world markets for commodities like powder, there are very strong grounds for optimism in the dairy sector. That optimism will only be realised if the prices that farmers receive for their milk start to improve across the board in the coming weeks and months.

“The latest data from the levy body, DairyCo, shows that consumer purchases of cheese have increased by 2 percent in the last year. Despite the number of cheese promotions on the supermarket shelves, the average price of cheese to the shopper has increased by 8 percent to £6.10/kg. DairyCo points out that the combination of rising prices and increased volume sales has meant the value of the cheese category has risen from £2.11bn 12 months ago to £2.35bn. Much of this growth in the past year can be attributed to imports but with less imported cheese now coming forward; it is time that some of the growing UK retail value in cheddar was passed back to those producing milk for cheese in the UK.

“Consumption of fresh liquid milk is similarly positive with consumer purchases up by almost 1 percent in the year despite an increase in average prices on the supermarket shelves. UK consumers are drinking more and more fresh milk and the recent growth in this sector – which already accounts for more than 5 billion litres of milk each year – could be shared more equitably with those who milk the cows.

“The positive outlook is underpinned by signs of recovery in European and world markets for products like cream, butter and milk powders with signs that demand is finally beginning to strengthen. A surge in the prices paid at the recent auction of milk powders held by New Zealand’s Fronterra and falling production in America, Australia and Europe provide a clear signal that improvement in commodity prices is expected. With the whole tone of the market for milk and dairy products improving, this must make its way back to farm level soon.

“In the coming weeks and months, NFUS will be sitting down privately with the key milk processors and major retailers to discuss the dairy sector. We will also be at the Dairy UK conference and European Dairy Event next month. In addition, following the Scottish Government’s Milk Summit in May, a commitment was made to hold a follow-up event this autumn. We look forward to a date being set when the Scottish dairy sector will once again get around the table to discuss policies that will drive the Scottish sector forward.”

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