Milk processors, retailers and politicians have been warned not to take dairy farmers for granted at a time when producers are struggling to keep their heads above water.
In a strong-worded warning to everyone in the supply chain, NFU Scotland said the current crisis in the sector cannot be overstated and that dairy farmers are faced with a huge task of trying to keep their businesses afloat.
“It is critical and undeniable that all parts of the supply chain must better share the risks and the rewards of the volatile market we now face,” said the union’s policy manager, George Jamieson.
“Dairy producers are currently carrying too much of the burden and have not benefited enough from the opportunities.”
Analysts’ views that there was a positive outlook for the sector would only ever become reality if “processors, retailers and all end users, governments and the consumer can all work collaboratively to overcome the massive challenges of peaks and troughs of volatility and competition”, added Mr Jamieson.
“Scotland wants to be part of dairying’s future, but all parties cannot take dairy farmers for granted,” he said.
Mature cheddar was an excellent example of failure within the supply chain, said Mr Jamieson.
“Sales of mature cheddar have risen by 2.9% in volume in the past year, while extra mature sales have risen by 6.4%. That is fantastic growth in a competitive food sector but not one that has benefited producers as farmgate prices have fallen by 20% in the same period,” he added.
“Given that the average shop price of cheddar is £6.55 per kilo – or £6,550 per tonne – but the wholesale cheddar price is only £3,200 per tonne, then the retailer’s margin on a hugely important produce like cheddar is well over 50%. That leads to justifiable questions as to why supermarkets are not sharing that level of profitability with producers at this critical time.”