Farming: Mixed welcome for milk price increases

By ANDREW ARBUCKLE
Published on 20/09/2012 00:00

THE decision yesterday by the country’s largest farmer owned co-operative to raise by 2.6p per litre (ppl) the price it pays to its milk producers was given a qualified approval by NFU Scotland milk policy manager George Jamieson, who welcomed the news producers on the liquid contract would see an increase of 2.6ppl and those in the balancing pool by 1.25ppl.

But he said: “This increase will lift the liquid pool to 28.65ppl and the balancing pool to 27.35ppl but there is no change to the cheese pool, which is a real concern.

“NFUS is under no illusion that prices of between 27 and 29ppl are sufficient at current costs. Farmers supplying cheese contracts are now at a disadvantage which must be addressed.

“With commodity prices rising, cheese values will rise and we will expect to see farmers on cheese contracts quickly seeing the benefit. Equally, retailers must return dairy product margins to processors; DairyCo figures suggest that retailers retain as much as 50 per cent of the margin on mature cheddar.”

Jamieson warned First Milk and other milk buyers that this recent round of price increases must not be a short-term tactic to bolster supply.

“We encourage farmers to ask supplier directly or through NFUS hard questions about future strategy, pricing mechanisms, added value and export strategy,” he said.