Scotland’s farming union has called on milk processors to pay farmers “as much as they can, rather than as much as they can get away with”.
NFU Scotland milk policy manager, George Jamieson, yesterday welcomed recent milk price announcements by some processors but said prices needed to be increased further.
He said milk market indicators AMPE and MVCE had now risen 60% on the year to between 36 and 37p a litre, however milk prices had only risen by around 30% to 27p a litre during that same period.
“We strongly encourage milk buyers to acknowledge the market and the needs of their supplying farmer ‘partners’. Processors should pay as much as they can, rather than as much as they can get away with if they are to inspire loyalty,” said Mr Jamieson.
“It cannot be stressed enough that the recent severe, extended period of very low prices has left serious and long-lasting damage to dairy farmers’ balance sheets and confidence, which has, and will impact on future investment on farm, with long-term consequences on the competitiveness of the Scottish dairy sector.”
He said the union had long called for collaboration between farmers and the supply chain to ensure risk and reward were shared by everyone.
“We believe current contracts for the most part are not fit for purpose, with pricing and volume management having significant room for improvements. We need to develop more sophisticated risk management tools and we have more to do to develop effective collaboration,” added Mr Jamieson.
He praised the work of some processors, including Muller which plans to allow farmers in its non-aligned pool to fix the price of a proportion of their milk for 12 months, and Lactalis for its new annual minimum price agreement.