Supermarkets cash in while dairies struggle

A REPORT published this week into who benefits from producing milk has once again pointed to "retailer profiteering", with supermarkets continuing to make profits from milk and dairy products while the majority of dairy farmers continue to receive a price for their milk that is well below the true cost of production.

The report by DairyCo looks at gross margins made by farmers, processors and supermarkets from the sale of fresh milk, mild cheddar and mature cheddar and according to NFU Scotland, this year it paints a bleak picture for both primary producers and those manufacturing the products.

In the year ending March 2010, supermarkets managed to increase their margins on all three dairy products - fresh milk, mild and mature cheddar - despite only marginal changes in the retail prices being charged to consumers.

In the same 12-month period, margins for those processing the milk were squeezed and the average price paid to farmers for their milk fell by 2p to 23.8p per litre.

The union point out that fall in price came at a time when the cost of producing the milk on farm was estimated to be between 26p and 27p.