After two years where the end price has often been below the cost of production, falling milk production across the UK and Europe, plus a slight lift in dairy commodity auction prices and firmer spot markets for milk, have now produced some optimism.
NFU Scotland will use the Highland Show as the platform for pushing milk processors and retailers on the need to drive prices upwards and that they must waste no time in responding to these positive price signals in delivering price rises to farmers.
Locally, the spot price for milk in the UK has increased by between 1p and 2p per litre (ppl).
Despite these upward factors, the union claims the majority of Scottish dairy farmers are continuing to receive a milk price less than 19ppl and some less than 16p for their milk.
Speaking yesterday, union president Allan Bowie said: “Milk prices have a huge distance to go if they are to return Scottish dairy farmers to profitability and rebuild the damage to confidence in the future for milking cows.
“In these statistics, we have the strongest indication yet that the tide is starting to turn and the UK dairy chain must waste no time in responding through milk price improvements.
“And with supply declining, spot markets lifting and commodity prices firming, traders and processors will be placed under severe pressure from NFU Scotland to respond immediately. That process will continue at the Highland Show. These are the toughest times in the dairy sector in living memory. If they value their supply, there must be absolutely no delay in milk companies and co-operatives passing any increased value in the chain back to producers.”
The push to get recovery in milk prices will not be easy as Bowie claimed an appalling feature of the current volatile marketplace has been the decision taken by some in the supply chain to capitalise on the weak bargaining position of farmers. These companies he said had passed on the full consequences of poor markets to their supplying farmers.
“That has seen a minority of irresponsible milk processors drag the sector in a downward spiral, as the more responsible processors are forced to compete,” he added.