PENNY pinching by milk buyers and retailers is short-changing Scotland’s dairy farmers, who believe they should already be seeing prices well in advance of 30p per litre.

At a meeting of NFU Scotland’s milk committee, as The Scottish Farmer went to press on Wednesday, members from around Scotland vented their anger and frustration with the dairy supply chain.

After two years of unprecedented price pressure, members felt milk buyers and retailers continued to undervalue dairy farmers and raw milk, with desperately slow price rises at the farmgate failing to match the surge seen in market prices.

And their concern carried a warning that if milk buyers don’t start to build trust, develop better contracts and pricing models and work to restore confidence, more dairy farmers will put their cows down the road.

Milk buyer Muller has taken its headline figure for November to 30.5p per litre, while First Milk in Scotland are to pay 28.59ppl in October. Arla is paying just over 31ppl, Lactalis 28.5ppl and Grahams 29.75ppl, according to listed prices.

However, spot prices for milk now stand at 40p or more and the current strength in dairy markets, combined with market indicators, are just not being reflected in the prices dairy farmers are being offered. The only producers who are not squealing are those on the books of OMSCo, where prices are above the 40ppl mark.

NFU Scotland vice president Gary Mitchell said: “Back in 2016, when prices fell to their lowest point for a generation, all dairy farmers would have been ecstatic with a milk price that started with a ‘3’.

“However, retailer domination and the liquid milk market continues to starve our industry of much needed cash, and that is hugely frustrating. With a difficult summer to graze cows, make forage and harvest grain, winter milk production will not come cheap, so scaremongering about over-production is the least of anyone’s worries.

“We need to see prices from the processors and retailers that are a true reflection of where the market is for milk and dairy products to try and build some confidence for our dairy farmers, who continue to be let down by their buyers,” said Mr Mitchell.

The union’s milk policy manager George Jamieson commented: “Commodity market indicators for milk powder, cheese and butter have more than doubled from the disastrous lows of summer 2016 to 40ppl in the last month. These are record highs for market indicators, but they are some considerable distance from being reflected in record highs at the farmgate.

“Milk prices paid to farmers struggled to 26 or 27ppl in January 2017 and only now are some farmers seeing 30p. Given the disastrous prices farmers had to endure through 2015 and 2016, this is surely a time when very legitimate, justifiable milk price increases should be coming down the supply chain.

“Processors who hide behind the threat of over-supply, or drop prices at the first sign of a ‘weakening market’, are irresponsible," stated Mr Jamieson. "The spot milk price is 40p so any extra going back to the farmgate will return a profit that will inevitably be spent on the business.

“The use of crude price adjustments by processors is reactive, unfair and very slow, so we need much more sophisticated ‘tools’. They must reciprocate and work with producers to better match supply to their demand and not use their power to manage their margins at the expense of loyal producers.”