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Union Outlines Necessity for Milk Price Rise
04/03/08

NFU Scotland believes the case for a milk price rise for producers has been strengthened, following a First Milk report which highlights that cost of production increases have more than outweighed any farmgate price increases seen over recent months.

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The report, entitled The Real Price of Milk, which was published today (Monday) was commissioned by the farmer-owned dairy business First Milk. It highlights the precarious condition of British dairy farming and calls for a ‘fair trade’ price to be paid to farmers for their milk, after a decade in which they have been forced to sell at a price well below the real cost of production.

The report details the rising production costs facing dairy farmers and asserts that they need to be paid a price of at least 29.64 pence per litre (ppl) in order to be able to reinvest in their businesses and secure a viable future. The report estimates current production costs at 26.64ppl and yet in 2006/7, the average price paid to producers was just 17.4ppl.

The global demand for dairy products has contributed to milk price rises over recent months but the report highlights that all of these price increases have been cancelled out by rapidly increasing production costs.

Willie Lamont, NFU Scotland Milk Committee Chairman, said:

“This is a very informative and helpful report.

“For a number of years now, dairy producers have been experiencing prices which are simply unsustainable and which are all too often exceeded by costs of production.

“As a result, we have seen many hundred dairy farmers leave the industry because they couldn’t afford to keep going, let alone reinvest for the future.

“About a year ago, we thought that our fortunes were beginning to change and milk prices started to rise. However, these increases have now been swallowed up by increased costs brought about by enormous feed, fertiliser and fuel bills, which will only continue to rise. Family labour must also be considered when looking at production costs.

“There is no room for complacency within the milk supply chain. We are now back in the position of needing a substantial price increase in order to be able to survive and reinvest.

“‘Fair trade’ is a term that is often used too flippantly, but it is exactly what is now required. Farmers, regardless of where in the world they live and work, require fair reward for what they produce.

“The report clearly sets out what processors and retailers must deliver in order to secure a sustainable dairy industry in this country. They must act now if they don’t want to suffer a milk shortage once again.”

· The full First Milk report can be viewed here

Average farmgate milk price in December 2007 was 26.60ppl*. This is 3.04ppl lower than the report claims is essential for producers to reinvest in their businesses.

* Milk Development Council figures

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