Good news for milk producers with price and contract plans

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Two significant moves by major milk buyers this week have been welcomed by NFU Scotland.

The first saw the Müller Wiseman Milk Group announce they were offering their members new contracts which would include, for those who receive the standard milk price, an option to link their milk price to movements in the value of global dairy commodities.

NFUS milk committee chairman Gary Mitchell described the move as a success for the union’s long-running campaign to see a formulaic approach to pricing adopted by milk buyers.

“We would encourage those supplying Müller Wiseman to have a look at the formula option,” he said. “This announcement has to be seen as the beginning of a process that sees other buyers follow suit.

“Post-2015, when the quota regime ends, farmers must be in a position to consider all market options for their milk.”

There will be a limited start to the formula with a maximum 110 million litres available from 1 July and producers will be required to commit at least 10 per cent of their milk volume.

Roddy Catto, chairman of the Müller Wiseman Milk Partnership Board, said the new formula was transparent and linked to recognised market indicators so that the price paid tracked upward or downward movements.

Then yesterday milk processor Lactalis announced it was creating an independent producer association as well as increasing its milk price by 1.39p per litre.

NFU Scotland’s milk policy manager George Jamieson commented that both moves were encouraging. “Cheese wholesale values have been slower to react to upward market pressures, so it is encouraging to see a positive move by a leading cheese processor,” he said.

“NFU Scotland has highlighted the need for cheese purchasers, be it retail or food service, to recognise that the margins on cheese must be spread down the supply chain. As wholesale prices rise, we expect farmers to share in the benefits.”