Retailers and processors have failed to heed NFU Scotland’s
warnings that low farmgate prices will result in a drop in production
and a loss of their supply of milk.
The Union made its comments on the day that the UK’s largest
milk co-operative announced it is unable to honour its original
contracts and supply the necessary milk to its customers.
First Milk today announced that it has invoked ‘force majeur’ on
its August milk supplies due to a marked reduction in the milk supplied
by its farmer-members.
NFUS has pointed to this as a further sign of the dramatic turnaround
in the milk industry, with retailers in particular now losing their ability
to dictate prices to suppliers. However, despite the strengthened hand
of milk suppliers, there remains considerable frustration amongst farmers
that the current market situation, in particular the dramatic rise in
prices for dairy products, is failing to translate into a significantly
higher farmgate price. This is leading some farmers to question their
current supply contracts with milk buyers. From further discussions NFUS
has had with the major players in the market, all the signals are indicating
a major rise in the farmgate price is imminent. Therefore, the Union
is reminding individuals to weigh up their options carefully before switching
buyers and, crucially, to work collectively.
NFUS Milk Committee Chairman Willie Lamont said:
“We have been telling the major supermarkets in particular that
the ridiculously low price paid to farmers supplying their milk, at a
time of spiralling costs, will jeopardise future supply. They have largely
chosen to ignore that message and, as a result, are now facing the consequences.
“We are witnessing a major shift in the balance of power in the
milk market. It is now a sellers’ market. Supplies are extremely
tight as a result of low farmgate prices, which have driven producers
out of the industry. These have been exacerbated by spiralling costs
and bad weather. On top of that, with huge rises in the prices of dairy
commodities, the supermarkets can kiss goodbye to the days of guaranteed
supplies of milk at prices which are unsustainable for farmers.
“Power is coming back into the hands of producers and for that
reason it is vital that we act together. I share the frustration of individual
farmers who are thinking of tearing up their current supply contracts
because improved returns are not coming through. I would, however, urge
anyone thinking of that to weigh up all the consequences and to contact
their current milk buyer with their views, preferably through the producer
“From the discussions we are having on an almost daily basis with
processors and retailers, I believe we are on the verge of a dramatic
uplift in prices and farmers need to ensure their have a reliable route
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