How one milk producer has been proved right

IN the early 1990s David Shaw, dairy farmer with 100 cows, was frequently at loggerheads with a Scottish Milk Marketing Board in its final throes.

That was because he had strong views on what the board, with a statutory duty to buy all milk produced in its area, should be doing to help ensure that dairy farmers had a profitable future.

He believed that the board should get rid of its Scottish Pride processing division and give farmers back the money that was deducted from their milk price to finance it.

He did not believe that when the board lost its powers, part of the Conservative drive to privatise and de-regulate, a voluntary dairy farmers’ co-operative would work.

Too many dairy farmers, he said - probably the biggest, the most efficient and those closest to milk processing centres - would sign up as direct suppliers to companies such as Robert Wiseman Dairies, which was already showing signs of the spectacular growth it would have in the next decade.

Or, as he planned it, David Shaw’s own company Sorn Milk, "run from a bothy" at his Crofthead farm in Ayrshire.

Before deregulation of the milk market in the late summer of 1994 he had been working to sign up dairy farmers.

From October this year, with confirmation yesterday that Arla will supply Asda with 78 million litres of milk a year from a new plant at Lockerbie, Shaw will have 100 dairy farmers, average production of each about one million litres a year, supplying Sorn Milk.

He will be the biggest independent milk supplier in the UK with a turnover of more than 20 million. He said yesterday:

"We’re having to extend the bothy a bit."

Not a man who dwells on the past, he was right about Scottish Pride, an expensive, badly-managed fiasco, and right that dairy farmers would find it difficult to stick together in a voluntary co-operative in a free market.

That market started promisingly. Ten years ago this month the first public auction of milk saw prices of 28p a litre. But for much of the past two years the average price has been 10-12p less than that, with protests outside supermarket depots.

Yesterday Shaw pointed out that his price is still top of the range at 19.5p per litre.

"Sorn Milk is run better than any co-operative," he said, a remark that takes in First Milk, whose 4,000 members still include many of Scotland’s 1,500 or so dairy farmers.

He added: "Everything I said at those milk board meetings was true. What I said would happen has happened."

He forecast the gap will eidden between what Sorn Milk pays, working only in the more lucrative liquid market, and what First Milk can pay, when an increasing percentage of its production might have to go at the cheaper processing price.

For him, yesterday’s announcement that Sorn Milk will increase its supply to Arla to 78 million litres a year, 47 million of which is dedicated to Asda, was the culmination of a year’s negotiations: "It’s a long-term agreement that secures a premium price for our milk."

He was not impressed by NFU Scotland’s partial involvement. John Kinnaird, union president, met Arla and Asda representatives yesterday and said afterwards: "It is farmers who have paid the price for cut-throat attempts to secure or regain market-share. The dairy industry can’t afford the consequences of those tactics, nor should this deal be an excuse for others to undermine prices."

Shaw said: "I left the NFU because farmers outside First Milk were not being represented, and never have been."

Now, he indicated, he does not need that representation.