Farmers are caught in milk war crossfire

SCOTTISH farmers say they are being financially hammered as the big supermarkets fight a milk price-war, forcing them to produce the staple at a loss.

Since supermarket giant Asda discounted milk to 2 for eight pints, others have followed suit, which means consumers can buy milk in bulk for 25p a pint.

The National Farmers Union says dairy farmers are struggling and claims that the discount war being fought by the big four supermarkets - Tesco, Sainsbury's, Asda and Morrisons - will only squeeze farmers further.

Kenneth Campbell, who has a herd of 400 cattle in Castle Douglas, said: "It's sickening when you see milk being used as the loss-leader in supermarkets.

"We've just been through Christmas and New Year; the frosty weather has made day-to- day life more difficult than ever and it's hard to see that."

He continued: "Global demand for the product is strong, so there is no need for (the price war]. It is costing me 30p a litre to produce and I'm getting 25p for it. People are getting very despondent."

NFU Scotland chief executive James Withers said: "The supermarkets always say the price war is coming out of their own pockets. But it is now costing around 30p to produce a litre of milk and farmers are getting between 25p and 27p a litre."

The NFU calculates that one in three dairy farmers in Scotland has ceased production in past ten years, from 2,000 in 1999 to only 1,100 now. The number of cattle has fallen from 282,000 to 185,000 in the same period.

Both Sainsbury's and Tesco have special deals with their direct suppliers of milk, who benefit from a higher farmgate price. However, NFUS said only 15 per cent of farmers benefit from a direct supply deal with a supermarket, with the others having to depend on big distribution companies.

According to the NFU, on average the farmer loses 3p on a litre of milk, the processor - who bottles it - makes 2p and the supermarkets make 15p. Many farmers have to put off replacing equipment and employ family members to work for nothing in order to survive.

Mr Withers said: "Family farms are not looking for special treatment, just fair treatment. The average milk price for a Scottish dairy farmer is 3p below the cost of production. And whilst they lose money on every pint produced, retailers are making millions on milk and other dairy products."

A spokesperson for Tesco said the supermarket paid the highest price, at 28.1p a litre, to its milk suppliers.Tesco director Lucy Neville-Rolfe said: "We remain committed to ensuring British dairy farmers receive a fair price for the milk they supply to Tesco that is above the cost of production."

A Sainsbury's spokesman said it had given its milk suppliers a winter bonus payment to help dairy farmers cope with the severe winter.

He continued: "We are committed to a sustainable dairy industry in the UK and recently offered to pay an additional discretionary premium for this winter while farmgate prices remain at current levels.

"This is in addition to the standard premium our farmers receive for investment in animal welfare and farm efficiencies."

No one from Asda or Morrisons was available for comment last night.