SCOTLAND'S dairy farmers may not be singing Jingle Bells just yet, but it will be a Merry Christmas on the milk price front with Arla, First Milk, and Müller all putting a few pence more into producers' stockings from December 1.

Arla producers will see a 1.49ppl December rise, taking the standard litre price to 24.63p. Arla Foods amba board director Johnnie Russell said: "This is our fourth consecutive rise, equating to an overall increase since September 1 of 5.58p per litre."

First Milk has confirmed A price increases for December of 2.5ppl for its Midlands and East Wales pool, and 2ppl for all other liquid and cheese pools. Co-op chairman Clive Sharpe said: “Since June, the average price increase across our main milk pools is over 8 ppl. We have continued confidence that our milk price will increase further during the first quarter of 2017."

A First Milk insider predicted that there would be a 'chunky' January increase announced within weeks.

Müller has already announced that it will be building on the 2ppl uplift taking effect from December 1 by adding a further 2.5ppl from January 1. This means Müller’s farmers will have seen their headline milk price increase by an average of 7ppl in the four months since October 1, with the actual price paid on non-aligned contracts for January expected to be 26.54p, including an estimated retailer supplement of 1.1p.

Following a series of roadshow meetings involving over a 1000 farmers, Müller is currently "reviewing the feedback" it has had, before issuing new contract documents in January, with the option for producers to sign up from February.

Müller's agriculture director Lyndsay Chapman said: "Following our acquisition of Dairy Crest's dairy operations and subsequent expansion of our own supply base, we are bringing together two milk supply groups, each used to different representational models, whilst moving to a single milk contract which aims to better align the supply of milk with our demand in the future.

"It is clear that in the past few years the whole dairy sector has suffered from supply and demand imbalance," said Mr Chapman. "Going forward we want to keep as much value as possible within our own farmer/processor supply chain by developing a closer working relationship with farmers, and moving away from current industry thinking which tends to be short term and reactive.

"We are keen to progress our new representative structure as soon as possible, with the immediate focus being the election of the new Müller Milk Group farmer forum representatives."

Chairman of the interim MMG board, Ronnie Catto from Aberdeenshire, told The Scottish Farmer: "The 36 producers in the North-east have been the hardest hit following the closure of the Aberdeen dairy. Because of this the non-aligned members are facing a 1.75ppl haulage charge for their milk to be taken to Bellshill. The few who are fortunate to have a Tesco contract get their haulage paid for and I have not given up hope of getting Müller either to do away with the charge completely, or at least get it reduced.

"We are encouraged that the company will now reflect the views expressed by Müller farmers across the country on the new milk contract. There is agreement that change is required and that old models should be reviewed to create the basis of a more sustainable industry."

NFU Scotland’s milk committee chairman Graeme Kilpatrick welcomed Muller’s price rise and commended the company for engaging with producers and taking on board their views.

“The fact that the contract is being reviewed is indeed a sign that the ordinary suppliers are being heard is good, as is the commitment to consider the longer term need to manage supply and demand requirements, as well as pricing in genuine collaboration with farmers. We sincerely hope that the non-aligned Muller supplier is genuinely being listened to and understood," said Mr Kilpatrick.

“This price commitment, which closely follows the Lactalis commitment to pay a minimum price of 27.5ppl for all of 2017, and the progress of First Milk, Grahams and Arla, emphasises the real need for farm gate prices to react to the ongoing strength of the dairy market and the prospect of low milk production as a consequence of poor prices.

“Stronger dairy markets have been too slow in feeding through to producers which, given the serious financial position many producers are in is disappointing, and there needs to be further commitment based on strong futures markets that the supply chain will not drag its feet any further," he said.

"While farm gate prices have accelerated from the lows of June by around 25%, objective market indicators, which track changes in the commodity prices of butter, powder and cheddar have doubled from around 16ppl to over 32 ppl, moving more quickly. There is more to come down the supply chain to the farm gate.

“The bottom line for farmers is that while the supply chain is involved in a very competitive market, the primary producers too often are innocent bystanders who suffer from the consequence of the ‘behind closed door’ negotiations between those more powerful in the supply chain," said Mr Kilpatrick.

“We urge the supply chain to look beyond the short-term and genuinely look at longer term sustainability. Some processors will be raising farm gate prices without a commitment from their customer, and we urge the retailers and other end users to react to the true value of dairy products and return value down the chain back to the producer.”

“NFUS is very clear that effective, professional, independent, democratically accountable farmer representation is fundamental to the sustainability and competitiveness of the dairy sector and progress such as we have witnessed from Lactalis and Muller is to be welcomed.

“We believe that there should be no compromise and that progress must be built on," he said. "The supply chain needs effective, agreed contracts, pricing mechanisms and representation that is genuinely effective. Muller, Lactalis and the co-ops are making progress which we commend. We are not there yet, as processors and retailers still have the power to mitigate the impacts of the market through the weak position of the producers. We must learn from the past two years.”