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Milk Co-op Cuts Price Leaving Farmers in Dismay

29 October 2009

UK - Dairy farmers are stunned and disappointed by the announcement that one of the UK’s largest milk purchasers, the farmer-owned First Milk, is cutting the price it pays to its members for their milk.

National Farmers' Union (NFU) Scotland has recently been engaged in a campaign of meetings and correspondence with major retailers and milk processors demanding an immediate improvement in milk prices for all producers on the back of soaring prices for cream, milk powders and butter and increased demand for fresh, liquid milk. In addition, there are signs that volumes of cheap imported cheddar being bought by major retailers are slowing up and that the market for home-produced cheddar will soon recover.

The First Milk announcement yesterday (Wednesday, 28 October) that it is cutting its milk price by 0.65p per litre comes on the eve of the company’s AGM being held at Shrewsbury today (Thursday, 29 October) and a round of co-op member meetings which commence next week (Tuesday, 3 November). The Union continues to meet regularly with First Milk officials and is encouraging its members who supply the co-op to attend these meetings and question their company representatives on plans to deliver an improved milk price in the future.

NFU Scotland President Jim McLaren said: “The market fundamentals are all pointing to significantly better prices for milk and dairy products and we are demanding that milk processors quickly share improving returns with those who supply them with milk. The milk purchasers we have been in touch with recently have, to date, been content to sit on their hands at a time when dairy farmers are desperate for positive signals that their milk is wanted and valued appropriately. "

He said that while most milk purchasers continue to dither, this First Milk announcement of a price cut comes as a real blow to making progress on milk prices this side of New Year. Yet the market signals are rapidly changing for the better with the value of cream doubling in recent months, milk powder prices comfortably above intervention levels and butter prices back to record highs last seen in 2007.

“Last week saw the auction price for milk in Northern Ireland jump to more than 28p per litre, a hike of almost 10p per litre on where the auction was pitched 12 months ago. On top of this, the volume of cheap cheese imports brought in by some supermarkets are finally starting to subside and fresh liquid milk consumption in the UK continues to grow and now exceeds 5 million litres a year," said Mr McLaren.

He continued saying: "Despite all this apparent good news, the whole dairy supply chain continues to miss-fire and it is ordinary producers, regardless of who they are supplying, who ultimately suffer through milk prices that consistently fail to meet the real cost to the farmer of producing the milk. "

“The First Milk announcement is a blow. It is a concern that the UK’s leading dairy farmer owned business is cutting producer prices from a comparatively low level just at the time when all the signals point to a substantial rise."

Mr McLaren finished by encouraging producers that the ongoing success of First Milk as a farmer-owned business remains hugely important to the Scottish dairy sector. Those of our members who supply the co-op must make use of the opportunities available in the coming days and weeks to meet and hear from First Milk officials on their view of the future. Difficult questions on the co-op’s operations and the strategy required to drive the company forward may need to be asked but members will welcome reassurance that there is a clear path ahead for the company.

TheCattleSite News Desk



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