Following a month-long review, the company said it will introduce measures to tackle the problem, which has seen Müller’s 230 Scottish dairy farmer suppliers cumulatively increase production since 2014 by the equivalent of 33 liters of additional milk per annum for every person in Scotland.
Surplus milk is currently being transported to England where markets can be found for it, resulting in more than 6,000 tanker movements travelling a total of 2.5m miles.
Müller said that means there will be a reduction in the overall volume of milk purchased in Scotland. This will be achieved by serving a full year’s notice on 14 dairy farm suppliers in the North East of Scotland, north of Aberdeen.
The company said these dairy farmers are located in areas that present heightened or complex logistical transport challenges for Müller. Should dairy farmers who are affected find an alternative buyer in advance of the end of their notice period, the company will support an earlier move. Affected dairy farmers have been contacted directly by the Müller farm services team.
Müller said it will also introduce a tiered transport charge for dairy farmer suppliers in Scotland from February 2020 with the fastest expanding dairy farmers shouldering a proportionately higher charge than those who have grown production more modestly.
For farms with expansion of more than 15%, there will be a 0.85 pence per liter surcharge (US 1.1 cents) on all liters produced; and a 0.55ppl (0.71 cents) surcharge for farms with expansion of 5% to 15%. This drops to 0.25ppl (0.32 cents) per liter for up to 5% expansion.
The charge, which will be reviewed annually, will apply across all farms and groups except Aberdeenshire farms who already pay a transport charge.
Rob Hutchison, milk supply director for Müller Milk & Ingredients said, “We fully appreciate that these measures will be extremely unwelcome and destabilizing for our farmer suppliers particularly in the North East of Scotland, but the current situation is unviable and we must act.
“We completed the largest single investment in fresh milk processing in Scotland in more than a decade at our dairy in Bellshill last year and we will continue to do what we can to stimulate new demand for fresh milk.
“But with fresh milk already in 96% of the nation’s fridges and overall consumer demand for the product in marginal decline, the reality is that it is extremely unlikely that this sector will soak up the heightened levels of milk production from farms which we have seen.
“Our farm services team will now work closely with affected dairy farmers and we will do everything in our power to help them adjust to the changes which we must now make.”
During the review period, Müller sought views and input from the Müller Milk Group farmer board elected to represent dairy farmers, National Farmers Union Scotland and Scottish Government.