Dairy giant Muller has been accused of riding roughshod over its producer board, after it pressed ahead with a 1.5ppl price drop in January against the board’s recommendation.
The 5 per cent reduction will take the price to 29ppl and follows a 25 per cent decline in the UK values of commodity bulk cream and butter since September this year.
NFU Scotland said Muller had set an appalling precedent and left farmers to pay the price, accusing it of jumping at the opportunity to ‘slash the price it pays to producers to shore up its own profits’.
Muller agriculture director Rob Hutchison said: “Substantial movement in butter and cream values is now a familiar characteristic of global dairy commodity markets.
“Whilst we are disappointed to see this sharp decline, the extensive portfolio of added value dairy
products we make in the UK will shield farmers from the full volatility of global dairy commodity markets.
“We will continue to offer a stable and competitive milk price at each point in the market cycle.
“In addition Muller Direct dairy farmers have access to innovative tools and support including the
Muller Futures Contract and Muller Farm Insights, which provides consultancy to help improve farm resilience.”
Other processors have now begun to follow suit, with Meadow Foods announcing a 1.25ppl drop in January and Freshways warning their producers to expect a drop.
But Muller Milk Group Farmer board chairman David Herdman said his fellow members had presented a solid argument, ‘from indebtedness on-farm, how we have only had a few months’ milk cheques and how farms needed to have a period of stability to make their business sound’.
Mr Herdman said he believed those the board spoke to were listening, but the message was failing to get to Muller chiefs.
Producers were also frustrated the processor was the first to drop its price, following a lag to pass on gains from the market.
NFU dairy board chairman Michael Oakes said: “We can see the market has changed, but it is still relatively high. We can see there will be some kind of adjustment, but there is no justification for a collapse.”
NFUS milk policy manager George Jamieson said the problems ran much deeper than this price cut, with poor value transfer down the chain by retailers and processors.
He said: “The good times for dairy farmers are neither long enough nor good enough to compensate for bad times.”
He urged suppliers to consider the benefits of a ‘properly constituted, professional Dairy Producer Organisation’, given the way suppliers had been ignored.
Mr Oakes added Muller needed to make sure farmers felt they were being listened to.
He said: “They have got to find a way of working together that they can trust each other.”