FEARS of a possible shortage of milk and dairy products have been raised in recent weeks, with farmers making it clear that unless they receive a higher price in the face of escalating production costs, they will revert to low-cost regimes and reduced yields from their cows.
The first in what is expected to become a series of announcements came yesterday, with Asda saying it was set to pay First Milk, the largest farmer-owned co-operative in the UK, with over 2,500 members in Scotland, England and Wales, an additional
£300 per tonne for cheese.
Each tonne of cheese requires 10,000 litres of milk and cheese prices on the wholesale market are expected move up considerably from the current level of £2,500-£2,800 per tonne. It is reckoned that it should translate into a 3p per litre increase in the ex-farm price.
First Milk handles about 1.8 billion litres of milk a year, of which 15 per cent is directed at the cheese market.
However, the liquid market remains at the very core of the UK dairy sector and on this front there are some worrying signals: last year production was at it lowest for 37 years and all the indications are that even less milk will be available in 2008-9.
Jeff Halliwell, the managing director of the First Milk Cheese Company, said: "It is very important for Asda that this price increase is passed back directly to dairy farmers, and we as a farmer-owned business can deliver that.
"We have been speaking to all our customers individually on the need to significantly increase the price they pay for raw milk and cheese to reflect farmers' costs."
The full article contains 295 words and appears in The Scotsman newspaper.
