After more than two decades where the milk supply industry in Scotland has become increasingly fragmented following the break-up of the Milk Marketing Board monopoly, an overwhelming majority of the 350 producers meeting in Lanark market yesterday agreed to look at closer co-operation in the future.
The trigger for their about-turn has been the latest cut in the farm gate price they will be receiving for their milk from processors from the beginning of next month.
NFU Scotland president Nigel Miller described the cuts as “pretty devastating” in that they would “ship millions of pounds” out of the pockets of primary producers.
The chairman of the union’s milk committee, Gary Mitchell, a 42-year-old recent entrant into the milk industry in Stranraer, took the initiative and called for united action in order to redress the present imbalance in reward in the supply chain. He indicated that his business would be £25,000 worse off if the 2p per litre cut was implemented.
Initially, the mood was angry, with several producers indicating they were going to tear up their existing contracts with processors so disillusioned were they with the way they were being treated.
Union dairy expert George Jamieson said that legal advice he had been given was that the contracts were “ropey” but he pointed out the “most contracts are rubbish but remember that you signed them”.
Producers then moved on to how they could help themselves to a bigger slice of the value of milk, with Gavin Millar jnr, of Gallamuir, Plean, Stirlinghsire, saying it was time for producer to “stand together” because “without us there is no milk”.
Robert Shearlaw from Ayr agreed that co-operation would provide better returns and the time to move in that direction was now.
Ian Smith, Lanark, a former chairman of the Robert Wiseman Dairy producer group, gathered applause with his call to support the union in its fight and to give it support to look into producers organisations (PO) as a method of strengthening their negotiating arm.
These POs – which can be created with a few as 50 producers – would then operate as brokers and sell their combined output with more muscle in dealing with the buyers.
Most producers who were present – and it was reckoned those that were there could represent half the 1.3 billion litre annual output of milk in Scotland – supported a proposal that the union should proceed down this line.
However, Ronnie Wilson, who runs a large dairy in the south-west and who admitted milk producers were “price takers”, was not convinced that more co-operation was the answer as he remembered the inefficiencies in previous co-operatives.
Although the union had invited processors to the meeting, only one took up the offer, with David Shaw of Sorn Milk telling the producers they had the wrong target as it was the retailers who were to blame for the current downward price pressure in the market. The round of applause he received demonstrated this sentiment hit a chord with many.
Jim Fleming of Lanark said it was necessary to speak to those “with the power” and in his book that was the supermarkets.
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Tuesday 21 May 2013
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