WHILE dairy farmers in the UK are struggling to cover costs even as milk prices are rising, on the continent the situation is even worse, with many of the major buyers cutting the price farmers receive for their milk.
On Monday an estimated 9,000 German farmers demonstrated outside a major dairy in Weihenstephan, while a large number of producers were planning to withhold milk from their regular outlets yesterday.
Many supermarket chains have slashed the reta
il price of dairy products and these reductions have been passed right down the chain to farmers.
Ernst Halbmayr, an executive committee member of the European Milk Board, said: "Farmers are not delivering milk to the dairies.
"A similar situation is developing in Italy, France, Luxembourg and Spain."
It is difficult to compare the prices paid to Scottish dairy farmers with those received by their counterparts on mainland Europe or in the Republic of Ireland – where there is also considerable downward pressure. Prices in the rest of the EU tend to relate to kilograms of milk, whereas in the UK it is paid per litre, with some adjustments for butter fat and protein. But it is clear that ex-farm values have declined by more than 5 per cent in the past year on the continent.
The UK has an annual production ceiling of 14 billion litres, with farmers being penalised with a "super-levy" if they exceed this. But it is many years since production came anywhere near to exceeding the quota, with production in the 12 months to 31 March this year the lowest in recent times.
That has forced all of the major UK supermarkets and the dairy companies to increase their prices to farmers, but if international commodity prices fall, and there has been some indication of that lately, then there is a possibility of downward pressure on ex-farm prices. The UK market remains in a state of uncertainty, with many farmers contemplating their future strategies.
In November 2006 a group of farmers established a new organisation with the title of Dairy Farmers of Scotland (DFoS). About 600 farmers – almost half of the producers in Scotland – have expressed support for this fledgling organisation, taking the view that they need a dedicated voice similar to that provided to members of the Scottish Beef Cattle Association.
After a meeting this month at Hamilton, Doris Robertson, the unpaid secretary of DFoS, told The Scotsman: "We met to discuss how to avert the imminent disaster facing Scottish dairy farming if a cost-covering milk price was not forthcoming.
"Many farmers agreed that there would be little point in feeding concentrates at prices on their way to £300 per tonne, signalling an even greater fall in milk production than last year.
"It was also stressed that if there was any drop in milk prices there would be an exodus of dairy farmers as never seen before.
"The decision to leave the industry could be hastened by the high value of dairy cows at present with cast cows also making much higher prices.
"Many producers will not want to miss the boat and fear that if the floodgates open the trade for cows may fall as sales increase."
The real fear must be that if the major buyers in Germany and France hold their ground, there is the distinct possibility of downward pressure on UK prices.
The full article contains 569 words and appears in The Scotsman newspaper.
