Muller analysis: Lack of processing capacity to blame for Scotland's 'over-supply'

UK over-supply

The Scottish over-supply problem is mirrored in the rest of the country.

Defra figures show 15.018bl of milk was produced in the year to September 2019.

That was 2.6 per cent more than in 2014/15. However, total UK processing has grown by just 0.8 per cent to 14.164bnl in the last four years, leaving a 854ml surplus – 45.3 per cent more than in 2014/15.

Other AHDB analysis shows Welsh over supply is particularly acute.

The recent closure of Tomlinsons Dairies means the country’s processing capacity is just 956ml, while its farmers produced 1.971 bnl of milk in 2018/19, a jump of 7 per cent in just two years.

Balancing milk production and processing is a perennial problem, with the market only being in control since 2015.

For more than 80 years before then, production and processing was either controlled by the Milk Marketing Board or, after 1984, by quotas.

Farms face closure if alternative milk buyers not found

Muller’s Aberdeenshire producers, many of who have invested heavily in recent years, must now find alternative buyers or close down their dairying operations.

But Peter Chapman MSP, Shadow Rural Affairs Minister and an Aberdeenshire farmer, said he was worried there was ’no-one else on the horizon to buy their milk’.

He said: "It reminds me of the situation when the broiler producers in the north east were told they only had three crops before their contracts ceased. Most of these broiler houses are still sitting empty.”

Opportunity North East (ONE), an initiative which aims to help the area build a post-North Sea oil future, explored setting up a farmer-owned milk processing in 2016 in the wake of Muller closing its Aberdeen plant.

The project received insufficient support at the time and was shelved but could now be resurrected.

News of the loss of contracts in the north east came as a large scale unit near Dundee went on the market.

Lundie Farming Company, which was set up as recently as 2014 currently runs 650 cows over 1,250 acres using a New Zealand style spring block calving system.