First Milk ex-farm price hike welcomed

Dairy farmers have welcomed a move by farmers’ co-operative First Milk to increase the ex-farm price of milk from 1 October.

First Milk is increasing the price paid to producers in its liquid pool by 1p a litre to 27.9p a litre and in its cheese and balancing pools by 1p a litre to 27.5p a litre. The Highlands and Islands milk pool is part of the cheese pool.

Chairman Bill Mustoe said First Milk had increased producer prices by more than any other national or regional milk buyer throughout 2011 as a result of improved business efficiency.

“We wake up every morning with one main focus – how can we put more cash in the till to drive sustainable returns for our producers,” he said.

“Our management team will continue to search out and create value for our farmers through new products, market opportunities and joint ventures.”

NFU Scotland milk committee chairman Kenneth Campbell said it was “hugely encouraging” that both First Milk and Milk Link – as the only two major co-operatives in the milk sector – were positioning themselves as increasingly credible options for dairy farmers to market their milk.

Processors had relied for too long on managing their profit margins through the control of their major cost – milk.

“First Milk has had the vision and courage to look beyond this thinking,” said Campbell. “There is a long road to travel before we have a dairy sector in the UK which returns value to all in the supply chain, but we are encouraged by First Milk as the first to take the initiative.”

While welcoming the price increase, Campbell warned that the price paid to producers was still below the true cost of production because processors had failed to take advantage of the global surge in dairy product prices.