Rumours of Robert Wiseman Dairies dropping the price it paid for milk as from the beginning of August were confirmed yesterday, with the 1.7p per litre (ppl) reduction being blamed on the reduced cash they were getting from the market.
According to the chairman of NFU Scotland’s milk committee, Gary Mitchell ,the price cut “sent shock waves through the whole dairy sector” following as it does a 2ppl cut by the same company earlier this month.
Combining these cuts, Mitchell said that, for the average Wiseman supplier producing around 1.4 million litres of milk a year, it was equal to a potential reduction in annual income of more than £50,000.
He regretted that East Kilbride-based Wiseman, which was taken over by European dairy giant Müller in January this year, had imposed further cut prices when dairy commodity prices for cream, butter and milk powders, which dipped at the start of the year, had rallied in both May and June.
In a pre-emptive move, Mitchell urged other processors not to follow Wiseman on the downward price spiral saying the dip in demand for dairy products worldwide was over and producers had every right to expect prices to improve in line with strengthening markets.
The union said that, once again, a price cut such as Wiseman underlined the fundamental flaws in the current dairy supply chain, pointing out that dairy farmers did not receive their fair share of returns when markets were flying last year.
There was also, according the union, “a level of suspicion” that the timing of the cut was pre-planned and strategic as, due to the peculiarities of the Wiseman contract, the earliest an affected producer could resign was December.
Peter Nicholson of Robert Wiseman Dairies said the company realised the news would come as a major disappointment. “We have done everything we can to minimise the reduction in our farm gate milk price but we must now reflect the substantially lower returns from the markets which we serve,” he said.
A far from happy Roddy Catto, acting chairman of the Wiseman Milk Partnership, described the cuts as devastating. The partnership had been unable to change the company’s position but they did not give their approval for the cut.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Friday 24 May 2013
Temperature: 3 C to 13 C
Wind Speed: 20 mph
Wind direction: North east
Temperature: 7 C to 17 C
Wind Speed: 13 mph
Wind direction: West