Low milk prices also due to poor efficiency
Low milk prices also due to poor efficiency
INEFFICIENCY in the milk processing sector is as much to blame for low producer prices as the strong £, says Scottish NFU president Jim Walker.
At this weeks Scottish Dairy Association conference in Edinburgh, Mr Walker questioned the trades insistence that lower milk prices were a direct result of the strong £ and weak commodity markets.
"If you look at Northern Ireland – same country, same currency – they have a milk price two to two and a half pence more than us, so exchange rate is not the only factor here," he said.
"There seem to be inefficiencies within the processing sector that are far too easy to pass back to farmers in a poor milk price."
But Jim Begg, director general of the Dairy Industry Federation, insisted that currency and commodity demand were the only factors involved in determining farmer prices. And, despite what some claimed, processors were not profiting at the expense of farmers.
"It is a fact that the farmers milk price in the UK moves directly in line with the sterling value of commodity dairy products in Europe," he said.
There were many people telling farmers to group together to give them more strength in the market or somehow to over-ride the market factors he had described.
But, said Mr Begg, while the market for dairy products was international, companies in the liquid sector, for economic reasons, would continue to operate on a UK basis. "So the scale required to achieve the same level of market power as processors in the negotiating stakes is that little bit less."
Farmers had every right to invest in processing provided there was no distortion in the milk supply. But if there were money to be made by increasing the UKs commodity processing capacity then someone, somewhere would be seeking to do it. And that was not happening, Mr Begg pointed out. *
Jim Begg: Currency and commodity demand are the only factors determining milk prices at the farm gate.