And NFU Scotland has written to the Grocery Code Adjudicator and Secretary of State on need for milk price transparency
Following on from its decision to slash the milk price paid to Muller Direct farmers, NFU Scotland and NFU England and Wales were expecting to meet with the milk processor next week.
NFU Scotland said it was shocked by the price cut of 1.5ppl Muller announced from January 1 and was looking for an explanation from the processor.
NFU Scotland Vice President Gary Mitchell said such a large drop needed to be explained.
“Why have Muller been the first to cut and cut so savagely when they have lucrative contracts that should provide milk price certainty to their dairy farmers?
“What makes the whole situation even worse is that this drop in price is out of line with our European neighbours and has, once again, left the UK market out of sync with the rest of Europe.”
Mr Mitchell said the size of the UK retail market and the amount of milk sold as fresh should provide stability and questioned if processors were chasing contracts on price ‘to the detriment of their dairy farmers’.
He added it was impossible for the market to function properly without greater price transparency.
“It is imperative that all sections of the industry are open and honest with each other for us to move on from the hard times of a few years ago.”
He highlighted farmgate prices were slow to respond when commodity prices surged but now that markets have softened ‘Muller has chosen to drop prices like a stone’.
“That has huge impact on confidence at a time when bank accounts have still to recover from the milk price crash in 2015 and 2016.”
He highlighted comments from dairy analyst Chris Walkland at Agriscot stating the average Scottish dairy farmer had missed out on between £40,000 and £45,000 of income.
Mr Mitchell added the union had written to the Grocery Code Adjudicator Christine Tacon and Secretary of State asking them to bring some ‘badly needed’ price transparency.
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“AHDB data shows a significant deterioration in the value of butter and cream of more than 25 per cent since September.
“By contrast, this 5 per cent milk price adjustment takes effect from January, some four months after the decline began.
“We are surprised at the NFUS’s criticism of the company for providing advance notice of a price change from January.
“Our understanding is that their preference is for processors to provide adequate notice of a change.
“We are doing just that, through compliance with the Voluntary Code.”