Farming: Milk price war of words heats up with Wiseman producer revolt

The battle over the price of milk has intensified with one group of producers stating in an open letter that they will not continue in business without an immediate price increase.

Iain Smith, of Lanark, who chairs the Wiseman Milk Partnership, said the present position was unsustainable with producers losing money on every litre of milk they produced.

He was supported by one of his board members, Roddy Catto, of Whitecairn, who described producers as being in a "dire position" financially. On accurately costed figures, he pointed out that he is paying 3p per litre more for his feed than he was only 12 months ago.

By his reckoning he was losing 2-3p per litre on the milk from his 100-strong herd. He believed there was more than adequate profit in the milk chain without there having to be any price increase for the consumer. "It is only the profit distribution that is all wrong."

Part of the problem, according to Catto, was brought about by the milk processors competing for market share. This brought downward pressure on the price they were prepared to pay to the primary producer.

In the letter, which had the unanimous support of all the producers, Smith also pointed out that world milk prices were operating at record levels but the UK price of milk is below that in New Zealand where the milk is going on to the commodity market.

Responding to the letter, a spokesman for Robert Wiseman said that recognised the increased input costs being faced by producers and said they were doing their utmost to address these worries.

But, at the same time, Wiseman was also facing increased costs and "intense competition" in supplying customers.

One positive move in the milk market yesterday saw Milk Link, one of the biggest producer-owned co-operatives, promise to raise their milk price by 1p per litre from 1 February.

Neil Kennedy, the group's chief executive, said: "As a farmer-owned dairy co-operative we are totally focused on maximising the returns we can generate on every litre of milk supplied by our members and passing the benefit back to them as soon as possible."

The Milk Link news was welcomed by NFU Scotland, their milk policy manager, George Jamieson, saying "well done in delivering a much-needed price rise" which lifted the price paid to its members to 26p per litre.

"I suspect Milk Link will also concede that, even with this welcome price rise, producers will still find it very difficult to cover the current costs involved in milk production."

Jamieson said the Milk Link move demonstrated to other milk buyers that the current log jam in prices could be broken.

"Perhaps the current dairy supply chain disaster can be resolved if others take Milk Link's lead and instead of engaging in an ongoing suicidal price-cutting spiral, there is greater importance given to added value, secure relationships and service."