Lactalis farmers are looking towards a switch to Yew Tree Dairies
Lactalis is facing a potential loss of 53 million litres of milk following resignations from about 20 farmer suppliers.
The farmers who have resigned were driven by prices which had been ’too low for too long’, according to Rory Christie, chairman of Lactalis’ Milk Suppliers Association.
"I do not want to target Lactalis solely, it is an industry wide problem, in particular for all those on non-aligned contracts," he said.
"The fundamental culture of down-shifting risk to the dairy farmer must change. If not, dairy farm numbers will continue to fall, there will be a loss of diversity of system and ultimately the consumers will face a loss of choice in the shelf."
Lactalis announced last week its price would exceed 25ppl in December, but many of the suppliers are reportedly considering a move to Yew Tree Dairy which is offering 30ppl for November.
"Yew Tree is offering a transparent system and they are offering both fixed price and future selling options," Mr Christie said.
"There is risk associated with it as they are a commodity seller, but if you get a shot of the highs then you at least get a chance to handle the lows."
Graeme Kilpatrick, NFU Scotland milk committee chairman, said: "We warned if suppliers did not come up to the mark they would seriously damage their supply base and farmers would vote with their feet."
He said farmers could understand low prices when markets were bad but when markets weare improving ‘that is when the frustration sets in’.
He added: "People are probably more frustrated now than they have been all year. It would have been better if they had moved by a penny in August. By dragging their feet, they are exacerbating the volatility. The whole industry is facing a meltdown."
A spokesman for Lactalis said it had implemented six consecutive months of increases and was ’committed to paying a competitive milk price’.
"This follows a period when UK milk prices returned to farmers have been at unsustainably low levels," said the spokesman.