First Milk says 100 dairy farmers are thinking of selling to its co-operative

More than 10 per cent of Scottish milk producers are actively considering changing their allegiance and moving towards selling their milk to the UK’s largest farmer owned co-operative.

Yesterday, First Milk said that they were in contact with more than 100 producers and potential members following a meeting in Ayrshire last week where chief executive Kate Allum spelled out the advantages of joining the co-op.

The possible shift comes after a couple of turbulent months in the milk industry where processors attempted unsuccessfully to impose a second price reduction in the value of milk.

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Yesterday Allum said she considered the milk industry was at a defining moment unseen since the deregulation of the sector two decades ago.

She said: “This country has never had a strong milk co-operative but now it has. Never before has it been so important for producers to understand the options in front of them. I want them to check their numbers thoroughly.”

She added that league tables showing payments made to producers by different firms did not truly reflect individual circumstances and every producer should look to their own figures.

She said that since last week’s meeting, First Milk staff had met many producers and gone over their returns. For some of the larger producers, the gap between First Milk’s price and their current buyer was often between 0.5p and 1p per litre in favour of the co-operative – a lot of money at the end of the year.

Allum indicated that the majority of those talking to First Milk were interested in becoming members, rather than just supplying milk.

The move towards the co-op is stronger in Scotland than in other parts of the UK, but Allum said she was sure First Milk would be increasing its GB market share from its present 13 per cent of all raw milk purchases.

She was also confident the group had outlets for increased supplies as it had a diverse range of marketing opportunities following its policy of looking for value-added milk products, adding: “We are not dependant on one part of the market.”

She was however reticent on whether the company would further extend its business interests by takeovers.

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Her comments came on the same day that Robert Wiseman Dairies announced it would collaborate with its dairy farmers on setting up a framework to determine how the price of farm gate milk would be determined in the future.

The Wisemilk Initiative will use the voluntary Code of Practice as a framework for discussions between four farmer representatives and directors from Robert Wiseman Dairies.

Pete Nicholson of RWD admitted that there were “tensions and a lack of clarity” in the supply chain at present and it was a time to rebuild trust.

Produce Roddy Catto said there was still a lot of anger among producers but he was hopeful the Wisemilk Initiative was a first step toward greater transparency.

The Wiseman move was welcomed by NFU Scotland president Nigel Miller.