NFU Scotland has called for a continuation of the rises in milk prices seen this year in 2012. The union said that, as input costs for dairy farmers continue to rise, processors must ensure increases in profitability are being passed back down the supply chain to producers.

The UK’s position in the European Milk League Table remains low, despite price rises seen at retail level in milk and dairy products; last month the UK was seventh from bottom, with UK producers earning around 4 pence per litre below average. NFUS said it is “adamant that the milk price rises seen in the last six months of 2011must provide a platform for further price improvements in 2012.”

Furthermore, the union surmised that price rises seen in 2011 lagged significantly behind the buoyant commodity markets for milk and dairy products and that continued market strength suggests that there is every justification for further price increases back to the farmgate in the New Year.

NFU Scotland’s Milk Policy Manager, George Jamieson said, “It is a huge disappointment that some liquid milk processors are looking to use a slight weakening in global and UK commodity values as justification for talking down the milk price when we should be building on the huge positives that exist in the market for milk and dairy products.

“Some commodity prices have weakened, but from a very high level.   Already there are signs that the global situation has stabilised, with both November auctions, carried out by the New Zealand dairy giant Fonterra showing improvements. In the UK, powder and cheddar prices are stable, and although butter and cream prices have fallen, they remain at levels substantially above those seen 18 months ago.

According to NFU Scotland’s own pricing formula, which is based on commodity values, milk is currently priced at 32.64p per litre.  Jamieson said that, allowing 1.5p per litre for transport costs, the union estimates producers should be receiving around 31ppl - 3ppl above the average price that farmers are actually receiving. 

Today (Tuesday 13th December) saw the farmer owned businesses First Milk and Milk Link make a timely commitment to their members.  First Milk is to deliver a further dividend to its farmers and Milk Link has committed to at least maintain its current prices until 1 April 2012. 

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