Landlords are being urged to give their tenant dairy farmers a rent holiday or rent rebate during the current dairy sector crisis.
The plea from the chief of the Scottish Tenant Farmers’ Association comes as the farmgate milk price continues to lag behind the cost of production.
According to STFA chairman Christopher Nicholson, tenant farmers are worst hit because they are only able to access a limited amount of credit to tide them over.
“I would call on landlords to show their commitment to the dairy industry and rural communities on their estates by offering support to these hard pressed tenant farmers,” said Mr Nicholson.
“The milk crisis is largely due to short-term over production and will resolve itself over time, but in the meantime dairy farmers are in trouble and need of assistance.”
He said tenanted dairy farmers had traditionally operated with little or no landlord investment in their holdings, with their tenanted status often acting as a “barrier to progress”.
“However, despite this lack of competitive edge and investment difficulties, these dairy farms continue to be the backbone of their fragile rural communities,” added Mr Nicholson.
“Now they find themselves going through a period of great uncertainty and hardship with more difficult times ahead. When milk prices are buoyant, rent increases have been sought, now, when the prick of milk is on the floor, landlords should be thinking of offering short-term rent rebates.”
Earlier this week the main milk buyer in the north and north-east – Muller Wiseman – announced plans to cut its milk price by 1.75p to 24.15p a litre from March 5.
It follows months of price cutting by all the major processors, blamed by a downturn in global markets caused by a over production and poor demand for dairy products.
Last month Glasgow-based farmers’ co-operative First Milk was forced to delay payments to farmers due to cash-flow problems.
The co-operative, which currently pays farmers between 21.2p and 21.57 a litre, says it is now back on track.
Mr Nicholson has warned that a large number of tenant dairy farmers supplying First Milk, particularly those in the south-west of Scotland, have been hit hard by the current crisis.
“Dairying is a high cost and capital intensive business and we would ask banks and lenders to take a long-term view when assessing the borrowing requirements of these dairy farmers until the milk market recovers from this global slump,” added Mr Nicholson.
In response, a spokesman for Scottish Land and Estates said: “It’s good practice for landlords and tenants to understand the challenges facing each other’s respective businesses and the situation in the dairy sector has had much publicity. In this instance, it would depend on the circumstances facing each individual farm but we would encourage early dialogue to ensure that the issues facing the farm business are fully understood.”