The NFU says that commodity markets have improved and, fuelled by lower levels of production, spot prices for milk are now approaching 40p (52 cents) per liter.
NFU Scotland says it is disappointed that all milk buyers in Scotland are lagging behind in passing on the increase in market prices to their suppliers with the scale and speed that it says the current market warrants.
Receiving more in 2007
It points to figures produced by the milk body AHDB Dairy that show in 2007, when prices for commodities such as butter and cream last reached the levels being seen today, the average farmgate milk price was in excess of 25p (32 cents) per liter.
Currently, the majority of Scottish producers are receiving less than 20p (26 cents) per liter – a gap of more than 5p (6.5 cents) compared to 2007.
NFU Scotland says it has been in regular dialogue with all milk purchasers in Scotland with further meetings scheduled for the weeks ahead.
EU reduction scheme
The farming group also says that almost 20% of Scottish producers are seeking to take advantage of an EU Production Reduction scheme whereby producers receive the equivalent of 12p (16 cents) for every liter less they produce from September to November when compared to last year.
The Rural Payments Agency has indicated that 1,800 UK farmers are looking to reduce production by 112m liters this autumn, which includes 154 Scottish producers.
Concern over production increase
European agriculture group Copa & Cogeca’s milk working party chairman Mansel Raymond said that across Europe 52,101 dairy producers out of 750,000 have responded to the EC’s calls to reduce milk production, adding that the money should be easily accessible to those who have committed to make this effort.
“We are already starting to see EU milk production decreasing,” Raymond said.
“But we are very concerned to see some other regions in the world increase their production. In the past decade (2007-2015), the EU has increased its production by 10% while New Zealand has increased its production by 36% and US by 12%.”
Price increase should happen now
NFU Scotland’s milk committee chairman Graeme Kilpatrick said that based on commodity prices, production levels and futures prices, every dairy farmer in Scotland should be getting 25p per liter now – and not in three or four months’ time.
“The price increases announced in recent weeks are welcome but they neither go far enough or fast enough in our opinion and leave almost all producers woefully short of a profitable milk price,” Kilpatrick said.
He added that dairy farmers in Scotland know the current commodity prices for cheese, butter, cream and powder, and the delay in milk buyers passing the benefits of the price increases to their suppliers is creating frustration.
“Some of those milk processors will be sitting on stocks of cheese, butter or powder, made with incredibly cheap milk, and are now set to make a windfall on them based on rapidly increasing market prices,” he said.