NFU Scotland has reacted cautiously to the announcement from Tesco
that it plans to increase the price paid to its liquid milk suppliers
by 0.5 pence per litre (ppl).
For many, this will be seen as scant recognition of the increased
costs faced by all milk producers. At the start of March, an
independent report, entitled The Real Price of Milk, highlighted
the rising production costs facing dairy farmers and asserted
that at the moment they need to be paid a price of at least 29.64ppl
in order to be able to reinvest in their businesses and secure
a viable future.
Today’s announcement from Tesco takes the price it pays
its dedicated suppliers up to 28ppl.
Willie Lamont, NFU Scotland Milk Committee Chairman, said:
“For over a decade dairy producers have been experiencing
prices which are simply unsustainable, being exceeded by costs
of production. They have been unable to reinvest in their businesses
or to make a profit. As a result, many hundred dairy farmers
have left the industry.
“Today’s announcement from Tesco is a small step
in the right direction and will go some way towards alleviating
the increased costs, such as feed, fertiliser and fuel prices
rises, being faced by Scotland’s dairy farmers.
“However, whilst the rise will mean that most can now
cover their production costs, it still leaves little room to
reinvest in businesses, something which as already been put on
hold for at least ten years due to poor prices. The long-term
lack of investment has led to a reduction in milk production
and the only way that this can be reversed is to create a sustainable
supply chain which, according to their rhetoric, is what the
retailers want to secure.
“The Real Price of Milk report showed quite clearly what
is required to make the industry sustainable and so these are
the figures that we really need to be seeing. In addition, there
needs to be recognition in terms of price increases not only
for those supplying liquid milk but also for those supplying
milk for other markets such as cheese.
“Tesco now has a job to do in explaining to its producers
just how it arrived at this price increase and allow producers
the chance to compare this to how their costs have increased
and decide if their Tesco contract is still sustainable.
“In order to secure the long-term future of the Scottish
dairy industry, we need retailers nationwide to recognise the
fact that farm businesses must be enabled to make a profit and
for their prices to truly reflect their genuine commitment to
securing supplies in the future.”
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