MÜLLER Milk and Ingredients is to 'exercise its contractual right' to serve 12 months notice to 14 dairy farmers in the Aberdeenshire area that it will no longer be buying their milk.

Over the last month, the company has been reviewing its milk supply arrangements, after announcing that it could no longer accommodate the 'unprecedented 25% surge' in Scottish farm milk production, which had left it with substantially more milk than it needed for local fresh milk markets – and a hefty transport bill to take it elsewhere.

"Surplus milk is currently being transported by Müller to England where markets can be found for it, resulting in more than 6000 tanker movements travelling a total of 2.5 million miles," said a company spokesman, who stressed that however unpopular it might be with dairy farmers, the company was now obliged to take action that would 'better align consumer demand for fresh milk with farm production'.

As well serving a year’s notice on the 14 producers north of Aberdeen, Müller also planned to introduce a tiered transport charge for its Scottish suppliers from February 2020, wherein the 'fastest expanding' dairy farmers would shoulder a proportionately higher charge than those who have grown their production 'more modestly'.

MMI milk supply director Rob Hutchison said: “We fully appreciate that these measures will be extremely unwelcome and destabilising for our farmer suppliers particularly in the North East of Scotland, but the current situation is unviable and we must act.

“We completed the largest single investment in fresh milk processing in Scotland in more than a decade at our dairy in Bellshill last year and we will continue to do what we can to stimulate new demand for fresh milk. But with fresh milk already in 96% of the nation’s fridges and overall consumer demand for the product in marginal decline, the reality is that it is extremely unlikely that this sector will soak up the heightened levels of milk production from farms which we have seen.

“Our farm services team will now work closely with affected dairy farmers and we will do everything in our power to help them adjust to the changes which we must now make.”

With regard to the company's new tiered transport charge for surplus volumes, it is understood that producers who have shown a greater than 15% expansion when their 2019 is compared to 2017 will be charged 0.85ppl on all litres produced. Those with above 5% to 15% expansion in the same period, will have 0.55ppl charged on all litres, while those with up to 5% expansion will lose 0.25p on all litres.

This charge will apply across all MMI's farms and groups except the Aberdeenshire farms who already pay a transport charge.

Commenting on the Müller announcement, NFU Scotland president Andrew McCornick said: “This is clearly devastating news and the livelihoods and viability of all those Scottish dairy farmers supplying Müller have been undermined by the outcomes of this review. None more so than the 14 dairy farmers in Aberdeenshire who have just been served 12-month notice by the company.

“Given the considerable commitment and investment made by dairy farmers, we now have producers looking to find a new buyer in the next year if they wish to continue milking cows while others, through haulage charges, face a significant cut in income at a time when milk prices are struggling to cover the cost of production.

“For those served notice, Müller are having a face to face meeting with these farmers in Aberdeen next week and NFU Scotland has asked if we can attend to support those farmers affected," said Mr McCornick.

“Since Muller made its original announcement, NFUS has been in – and remains in – regular dialogue with several stakeholders in the sector in Scotland and beyond, including Scottish Government, in a bid to offer solutions to this announcement."

Adding that Müller's retreat from Scotland's north-east was a further sign of 'deep-rooted issues' within the UK liquid milk market, Mr McCornick noted that NFUS was involved in a joint union effort to secure an urgent, short-life investigation by Westminster into fresh milk to determine what has led to the recent destabilisation of the UK liquid milk market.