The National Farmers Union Scotland’s Milk Committee has called on retailers and milk processors to end their price war or face losing their supply base altogether.

The NFUS Milk Committee, representing dairy farmers across the country, met on the same day that the farmer co-operative First Milk announced a price cut of £0.002 (US$0.0036) per litre.  This follows a series of price cuts made by processors in the last few weeks.

“The First Milk cut is hardly a shock given the tit-for-tat cuts made by their processing customers in recent weeks, said the committee’s chairman Willie Lamont, a dairy producer from Dalry, Ayrshire. “However, it is further proof that the industry is being destroyed by big companies, wielding too much power and working under a completely blinkered, short-term buying policy.  Effectively, processors and supermarkets want to pay as little as possible for milk to grab whatever market share they can, completely ignoring the fact that they are driving their supply base out of business as a result.”

“There is no doubt that oil prices are driving up costs throughout the supply chain, but Tesco won’t get a shred of sympathy from me for complaining about that at the same time as announcing £908m in profit – tens of millions of which come from milk and dairy product sales,” he said. “The supermarkets and processors just pass their own costs down the chain, and farmers sit right at the bottom.  These companies are living in dreamland if they think they can keep asking farmers to pick up their bills and, at the same time, absorb their own increases in production costs.   Even more galling are those supermarkets who have increased retail prices on the promise to shoppers that it is to help farmers.  In fact, the money sticks to everyone’s pockets on the way through and never gets near the farmgate.”

“There are genuine attempts being made by industry organisations to map out a future for the sector,” he said. “That involves commitment from farmers to help themselves out of the current crisis.  But they can’t do it alone.  The most important step that can be taken is for the major processors and supermarkets to adopt some long-term perspective and recognise they can’t keep protecting and enhancing their own margins at farmers’ expense; that is surely the responsible action for their own futures and the interests of their shareholders and customers.”