Dairy farmers could face a “crisis of confidence” unless milk buyers’ follow Tesco’s lead and increase the price they pay for milk, according to NFU Scotland.

The NFUS warned “dithering” by milk buyers to follow Tesco, who confirmed a 0.5p/litre increase to the price it pays its 800 Arla and Robert Wiseman producers this week, would do nothing to encourage farmers to produce more milk.

“If retailers and milk purchasers are sitting scratching their heads, wondering why farmers are not responding to current farmgate milk prices by producing more milk, then they need to get their backsides out of the office and into a milking parlour,” said Willie Lamont, NFUS milk committee chairman.

Costs

“The cost of producing milk has gone through the roof. Retailers need to get their hand in their pocks now and pay a fair price for the diary products they source,” he added.

“If they don’t, then their claims of supporting dairy farmers and their apparent concern over security of supply will be seen as little more than lip service.”

Mr Lamont said with growing public demand for dairy products and strengthening world markets, this should be a “buoyant time” for the dairy industry.

“If the rest of the supply chain wants to stake a claim in what should be a healthy future, they need to wake up to the reasons why milk production in this country is heading down the pan.”

The NFU also lambasted other milk buyers for their “inertia” in failing to raise prices, but said the increase by Tesco, which takes its milk price to 28p/litre until the next price review in six months, was a “move in the right direction”.

Fair pricing

Gwyn Jones, NFU dairy board chairman, said it was vital Tesco tracked the “likely significant” cost changes over the next six months to ensure producers were paid a fair price.

“The relationship between the producers and Tesco is still be at an early stage, but we’ve been encouraged by what we’ve seen so far,” he said.

Robert Wiseman said it had already begun to implement higher selling prices to recover increased costs incurred by their suppliers and the processor and secure supplies.

The increase will come despite weaker bulk cream prices, which would usually lead to lower milk prices, Wiseman added.

Reviewing costs and prices

Arthur Reeves, Dairy Crest milk purchasing director, said the processor was reviewing its milk prices and was conscious of cost pressures its producers faced, but wouldn’t make any increases in the “imminent future”.

“At the moment commodity prices are week so there are downward as well as upward pressures,” he said.

“We won’t make any chances for April but we do review our prices each month.”

Waitrose said it welcomed any move to secure a fairer deal for dairy farmers but it had no plans to increase the price it pays to its Select Farm Producer Group members.

A spokeswoman for Sainsbury’s said the supermarket would continue to monitor the price it paid suppliers.