THE GOVERNMENT must step in to address the problems that are currently dogging the dairy industry, according to NFU Scotland.

In the wake of the damning report on the industry by the House of Commons Environment, Food and Rural Affairs Committee, the union insists that there must be greater transparency in the supply chain to ensure that producers receive a fairer share of the margin on milk and dairy products.

The EFRA committee‘s report cited a culture of mistrust, suspicion and self-interest in the dairy industry.

That, says union president, John Kinnaird, must act as a wake-up call for the industry and government alike.

“The destructive state of the supply chain needs to be addressed, and government has a clear role to play,” he said.

“Producer margins continue to be squeezed, despite the opposite trend for processors and retailers.”

The lack of trust is a result of the lack of transparency, Mr Kinnaird insists.

The Scottish Executive has agreed to facilitate discussions involving representatives from all links in the milk supply chain. “DEFRA must also now step up to the plate,” he said.

“The relationship between farmers, processors and retailers must be scrutinised to ensure there is accurate information on costs and margins and to ensure a fair share of the shelf price is passed back to producers.”

Mr Kinnaird adds that producers also have a role to play, with more co-operative development offering farmers the chance to redress the balance of power in the supply chain.

Figures released this week by the Milk Development Council show that the UK average milk price in 2003 was the lowest in the EU for the sixth year in a row and was some 14.5% below the EU average.