Supermarkets deny causing plummeting milk prices

Rural Affairs Secretary Richard Lochhead has called for action at a European level to address the problems facing the dairy industry. Picture: TSPL

But MSPs accused Morrisons and Asda bosses of denying their role in plummeting price levels.

Dairy chiefs called for a boycott of the stores recently amid claims they are now paying below cost price for milk. Holyrood’s Rural Affairs committee today heard they pay 24.87p per litre for milk to the Arla co-operative.

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But the Royal Association of British Dairy Farmers, which along with the National Farmers Union and Farmers For Action say that 30p a litre is the minimum price that producers can survive on.

Former environment minister Mike Russell told the supermarket bosses: “You play a role in the price that is paid to farmers.”

Mr Russell said if processors or the co-operative was paying prices which were “too high” for their liking, the supermarkets would “choose another processor.”

He added: “It is part of the mix of decisions by which you decide which processor gets the contract.”

But Ewan MacDonald-Russell, Scottish Affairs Adviser, at Morrisons insisted price is not the “deciding factor” in buying milk with distribution costs and manufacturing capacity also taken into consideration.

Andrew Loftus, Agriculture Manager, Morrisons said milk markets are “global in nature” today.

“The UK is 3 per cent of global production and Morrisons is 3 per cent of UK production, so if there is an influence on the global milk price, by golly it’s a small one.”

But Mr Russell insisted that the supermarkets are a “determinant” in the process.

“You have to be, you’re buying it,” he said.

“No matter - it seems too difficult to be accepted, but that is I think indisputably the case.”

The committee also heard from Chris Brown, Sustainable Business Director at Asda.

Mr Loftus said the margins from dairy products are “slightly under” those made from the group in general.

He added: “If the question is profiteering or making money, the trend is downward - we’re making less than we were.”