Probing First Milk’s producer price plan

The call came from union milk policy manager George Jamieson, in response to the June price move by the co-op, which saw its ‘A’ price drop by between 0.28p and 0.36p per litre, alongside an increase to its ‘B’ price of 1p per litre.

Mr Jamieson said: “We are very disappointed at the latest announcement by a milk buyer to reduce the price paid to its supplying farmers, continuing the recent trend of ‘stall and fall’.

“First Milk’s announcement follows other cuts, all of which are unjustified given the very strong market indicators and the latest production figures which show that we are already past the spring peak. All processors must realise that dairy farmers may not be willing to produce milk into the back end if they see no profitable future,” said Mr Jamieson.

“Butter and cream, already at historically high levels, rose again last month by 15% (£1960) and 13% (£4300), cheese rose by £200 per tonne, and even SMP rose modestly. Market indicators AMPE and MCVE are back at 31ppl and 33.3ppl, which the NFUS formula suggest should deliver around 29ppl at the farm gate.

“We know we can’t buck the market, but we should expect a decent price when the market is strong,” he insisted. “The supply chain must value primary production and not make the mistake of taking it for granted. Dairy producers have survived a long and profound crisis, with First Milk members amongst the worst affected.”

What little farm gate milk price ‘recovery’ there had been since had been too short and insufficient to rebuild balance sheets or confidence, warned Mr Jamieson.

“That recovery has so far seen average prices of around 26 to 27ppl, and has lasted for barely four months before processors have stalled the process in a market where commodity prices are strong and rising and production is fragile,” he reported. “ AHDB figures show average costs for even the top 25% of producers are around 26ppl.”

Mr Jamieson stressed that the NFUS had regular communications with First Milk at various levels, with a First Milk council member attending its milk committee meeting next week, and a meeting with the co-op’s new chief executive scheduled early in June.

“Key for NFUS is a strong and competitive First Milk, and a clear plan to raise returns to its Scottish members,” he added.

Announcing the price change, First Milk chairman Clive Sharpe said: “You will be aware that there have been some price reductions in the market over the last few weeks, which have impacted the pricing mechanisms that we have in place with our customers.

“Looking ahead, there has been some upward movement particularly in short term markets, which is a welcome positive signal. As a result, the B price range is increased by 1p, to 24p to 25p per litre, and we anticipate that B prices for July will be a minimum of 25p.”

Source: The Scottish Farmer


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