With all the market signals pointing towards a finely balanced supply and demand situation in the dairy sector, NFU Scotland has called on milk buyers to deliver stability to Scottish producers as farmgate prices once more come under pressure.
In the wake of recent price cuts – including the first announced by the First Milk co-operative since last summer, which will see prices drop by between 0.1p and 0.35p a litre – the union wants milk buyers to give a “strong sign” to their suppliers that any price cuts now would only be temporary.
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The union’s milk policy manager, George Jamieson, said that the fine balance had seen global and regional milk buyers waiting to see how supply and demand would balance out.
“All parts of the dairy chain are watching the market but given the very serious dent in producers’ cash flow, net worth and confidence suffered over the last two years the response of processors and retailers now is crucial,” he said.
“Strong signals and a clear commitment to deliver a fairer share of the rewards from dairy markets are what is needed. Butter and cream prices remain strong and the cheese trade is only marginally down.”
He added that while high stocks of powder were affecting skimmed milk prices, there were few drivers for drastic price change.
“While the market has weakened slightly in recent months, dairy futures and the global dairy auction – up 3.5 per cent this week – are all suggesting that milk values should at least hold,” he said.