Scotland’s dairy sector has been dealt another blow with the main milk buyer in the north and north-east – Muller – announcing plans to cut the price it pays farmers in January.
The dairy giant has given producers a month’s notice of a 1.2 pence reduction to their milk price – this will bring the standard litre price down to 25.9p a litre on January 10, 2015.
Muller blamed a double whammy of record milk being produced on farm and weak demand for the cut to its price.
According to the firm, UK milk processors are struggling to find a market for the extra milk being produced by farmers this year.
It estimated that an extra 1.2billion litres of milk was being produced on farms, which is the equivalent of 43,000 tanker loads.
“Returns from sales of cream and butter remain depressed due to high levels of supply at a time when demand is weak,” said the firm’s head of group milk supply, Martin Armstrong.
“We have completed a series of meetings with farmers who supply us across England, Wales and Scotland to discuss the immediate market outlook, the challenges currently faced and our strategy for growth. We will continue this direct dialogue with our 1,200 farmer members to keep them informed of progress and prospects.”
Producers have faced continued downward pressure on their prices for the past few months.
Last week UK dairy farmers’ co-operative First Milk announced plans to cut its milk on January 1, blaming a fall in market returns.
The firm will reduce its standard litre liquid price by 1 pence to 21.7 pence a litre and its manufacturing price by 1.1 pence to 22.9 pence a litre.
This follows a cut instigated by European farmers’ co-operative Arla on December 1.
The co-op blamed challenging markets for a 1.63 pence reduction to its standard litre price to 26.84 pence a litre.