In recent weeks I have been involved in a Committee Inquiry considering the Scottish dairy sector and milk prices.
The Rural Affairs Committee inquiry was prompted by news in January that First Milk, one of the UK’s largest dairy co-operatives which purchases milk direct from farmers for processing, was deferring payment to its members for milk supplied.
On top of late payments made by First Milk, the inquiry heard evidence that farmers contracted to the cooperative have consistently received lower prices for milk compared with other processors.
Across the sector, we have a situation where the price being paid to farmers varies significantly – with some receiving more than it costs to produce and others receiving less. The committee found a clear lack of transparency in the price farmers are paid and the margins made by processors and retailers.
At an NFUS briefing this week we heard from dairy farmers directly about the pressures a short term fall in milk prices have created.
Dairy farming is a hugely important industry in Scotland but current pressures present a threat to the livelihood of individual farmers.
We heard deeply concerning evidence from the UK Groceries Code Adjudicator about examples of poor practice from supermarkets in penalising suppliers and I am pleased that these are now being investigated by the GCA.
Action is needed to address the challenges facing the industry and I’m pleased that the Committee Report is focusing attention on these issues. Following our Inquiry there will be a response from the Scottish Government. I hope it will address not just the short term issues but will look to a range of issues. We need new products to capture the value of fresh milk in Scotland and the UK.
We need new product development, for example for yoghurt, cheeses and use of dairy ingredients in food products and bigger capacity for production in Scotland. We need to see the catering and public procurement sectors make better use of locally produced dairy products. We need more accurate labelling by food producers and a bigger efforts to support local producers by our supermarkets. We need to make the maximum use of export drives at the UK level to promote our home grown products.
With 2015 marking the Year of Food and Drink we need to see renewed focus from all involved to deliver the best deal for Scottish dairy farmers and a stronger lead from the Scottish and UK Governments.