Tough cheese markets blamed for First Milk price cut

In the latest milk price cut, First Milk has said it will reduce the price it pays its farmer suppliers by 1.25p/litre from 1 April.

The move was in response to declining cheese and ingredients returns and takes First Milk’s standard price to 23.05p/litre. It follows confirmation on Monday (30 March) that Tesco would cut its price to dairy producers by 1.32p/litre, reflecting a drop in the cost of production and a fall in the market value of cream.

First Milk chief executive Peter Humphreys said the company had made a number of changes to the business to reduce costs in what was a “very tough” market.

“We are seeing good sales growth with our cheese brands. Mull of Kintyre, Scottish Pride, our Lake District range and our Pembrokeshire range have all gained wider distribution in national retailers over the past few months,” he added.

But NFU Scotland milk committee chairman Jimmy Mitchell said poor supermarket labelling of imported cheese was undermining the efforts of milk companies to build successful added-value brands.

“First Milk claims they are being forced to reduce the price they pay their suppliers because of poor returns from the cheese market. This is another example of poor labelling allowing imported, cheaper cheese to appear on supermarket shelves marked as ‘value’ and ‘packed in the UK’.

“Consumers tell us they depend on clear labelling to make informed decisions about the food they buy and, while they would like to support the Scottish dairy industry, the wool is pulled over their eyes by misleading packaging.

First Milk also confirmed that the capital investment levy of 0.5p/litre would end from 31 March for members who had contributed for the full period. “Capital investments began in December 2004 in relation to the purchase of our shareholding in Robert Wiseman Dairies and were extended in 2006 when we set up the First Milk Cheese Company,” Mr Humphreys said.