By Pat Wilson

I TOLD myself that when I wrote my next ‘piece’ for The SF I wouldn’t major so much on the milk price – but I just can’t help myself following yet another announcement of a drop in values.

One major company is to cut its price by 1.55p per litre from January 1 – Happy New Year to you too! Others have followed suit.

They’re like sheep – one goes and then they all follow. And the reason given? – substantial movement in butter and cream values. 

The recommendation has gone against the wishes of producer boards, who say they are both shocked and disappointed by the announcement. Fair play to First Milk, though, which will hold its current price of 29p per litre. 

The dairy market has weakened of late and so the outlook for the UK market continues to intensify. Milk buyers have been consistently told of the difficulties producers are facing as they try to recover from the unsustainable milk price of 2015/2016. 

They are well aware that the cost of production including fuel, interest rates, hay, straw, fertiliser, energy, labour and property repairs are increasing. It’s not rocket science, so why is it not being taken on board? 

Direct milk buyers were told they ‘had it good’ when it was really bad elsewhere. No-one can argue that one, except that the counter version could be that those producers weren’t getting too much, but that those at the opposite end were getting too little. We milk producers don’t want a fortune, just a fair price please!

I’m told the February milk price will be maintained. This is positive news, but who knows what further pressure will be put on the market as we approach the spring flush? 

That, coupled with declining markets, uncertainty around Brexit and issues around labour makes for continued concern. Surely, it’s crucial that we make our UK dairy industry and UK farming in general sustainable as we get nearer Brexit. 

Processors and co-ops need to reassure their producers that they are doing EVERYTHING they can to ensure milk prices reflect true markets and not those of fantasy ‘futures’ markets (to quote Gary Mitchell).

So, who is responsible for price cuts? The milk buyers blame the supermarkets and the supermarkets’ blame the milk buyers. My understanding has always been that it’s the middle-man who makes the money. 

Most supermarkets announced pre-tax profits of millions of pounds in their last financial year, so why force the price down of a commodity used by 99% of consumers. Milk and bread are probably the two things we don’t look at the price of when buying them. 

Water is grossly overpriced but is showing no decline in sales. Last year, UK sales of plain bottled water grew by 14% to reach 2.9bn litres! Just saying ...

Going back to that penny and to put it in perspective. It doesn’t sound like very much, but I remember, as a young child – and that certainly wasn’t yesterday – my late father phoning round the various fuel companies for price quotes. I recall saying to him: “It’s only 1p, what difference can that make”? His response was that if you’re buying thousands of litres, it’s a lot of money over a period of time. 

For instance, if you produce 8000 litres of milk per day and you take a 1.55p/l cut, it equates to well over £44,000 a year. That would pay a lot of bills and is the difference between profit and loss. How many businesses could sustain that? 

The old saying: “If you can’t stand the heat get out the kitchen ...” is sadly ringing oh so true today as well-known herd after well-known herd gets sold off because of rising costs and little prospect of an upturn in prices.

One such herd was the highly respected Deveronside pedigree Holsteins, which came under the hammer at Carlisle, last month. This outstanding herd was established at Kinnermit Farm 75 years ago when Kenny Mair was just one-year-old. 

The Turiff-based farm is now run by Barclay Mair and his wife, Lucy, who made it one of the most productive herds in Scotland with an average of more than 11000kg. Barclay told me it wasn’t the seven-day-a-week working, or the long hours which brought him to the decision to sell, but the fact he was consistently doing it for nothing. 

I suppose it’s similar to running at full-pelt and looking back a year later and you’re still standing in the same place. I’m not a betting person, but which big hitter is next?

Trade for the Mairs topped at 4000gns with an average of £1720. For anyone interested the next sale date for this fantastic herd is January 17, but what kind of trade will it be? 

Just a month on and there has been a dramatic fall in the price of dairy cattle. The price per head has fallen by a staggering £425. In my opinion this is a direct result of producers voting with their feet (or their hands) and showing they have no confidence in milk buyers.

For a bit of useless information … I have always held the ‘minimum wage’ in contempt within the farming industry. In fact, it makes me laugh, but Farm Business Income (FBI) is the tool used by the Scottish Government to indicate income for farming businesses. 

I won’t bore you with the mechanics of how it works, but the most recent figures show that the average FBI for dairy farms fell to £900, equivalent to an hourly wage of just 46p per hour for unpaid labour. That’s 94% lower than the minimum agricultural wage in Scotland!

I close the door on 2017 with bittersweet memories. It’s always sad to think yet another year has passed me by, but in another way I’m not sad to see it pass.

This past year provided us with the devastating loss to my family of my twin brother, Tom, at the all too tender age of 51. Tom worked long, hard hours within the dairy industry and was passionate about what he did. In that vein, make the best of every day you have – a healthy man is a wealthy man.

Wishing you a happy, healthy and prosperous 2018, and lang may yer lum reek.