NFU Scotland has highlighted the ‘soaring costs’ on-farm, and the tightening supply situation, and argued that the farmgate price needs to be closer to 40 pence per litre than 30ppl.
The union has also said that the next year will see continued pressure on Defra, in tandem with the other UK farming unions, to make the statutory Milk Purchasing Code and new dairy contracts a reality.
Progress on both price and contracts will be essential if dairy farmer numbers are to stabilise, said NFUS, which noted that the latest AHDB producer figures, based on the number of levy-paying farmers, showed only 8000 herds remaining in Great Britain, with 310 dairy farmers having quit in the past 12 months. Within that, Scotland now has only 836 herds, a figure which may reduce further when the Scottish Dairy Cattle Association releases its end-of-year figures soon.
NFUS vice president Andrew Connon said: “The first quarter of 2022 will be a pivotal time for all. While we welcome the fact that milk prices have increased across the board in the last few weeks of 2021, the reality is that on farm costs have matched and, in some cases, outstripped these increases. Feed, fertiliser, fuel, and labour costs are escalating at an alarming rate of knots.
“We have consistently stated that the supply chain from consumer to cow must change,” said Mr Connon. A fair on-shelf price for milk will deliver for all including the retailer, processor, and primary producer.
“Tightening supplies also support the drive for milk prices to be closer to 40p per litre than 30p. AHDB report that GB milk deliveries are now running 3.6% below the same week last year – equivalent to 1.21 million litres. With spot milk currently trading at above 45p per litre, the signals are clearly there for all to see,” he said.
“This is not a situation unique to GB. Dairy markets in the EU-27 have seen strong price increases in recent months, as limited growth in milk supplies has constrained production of most dairy products.”
On statutory milk contracts, the UK Government and Devolved Administrations have published their response to last year’s consultation seeking views from dairy farmers and processors about how contracts and relationships could be improved. Defra are now working towards a UK Milk Purchasing Code, which will be made by regulation using the powers under section 29 of the Agriculture Act 2020.
NFUS was commited to driving this forward, said Mr Connon: “Our milk committee subgroup for contracts continues to spend a huge amount of time on this, working in conjunction with stakeholders including Defra and Scottish Government. Our collaboration with the other farming unions ensures we keep moving forward with the ambition to get this to a favourable position for all.
“The introduction of well-considered, appropriate legislation regarding dairy contracts between dairy farmers and milk buyers is essential. It will create the foundations of a modern, thriving dairy industry based on contracts that, through free and equal negotiation and in good faith, have been agreed by all for the benefit of all in the supply chain.”