Farmers gathered at the annual Scottish Dairy Hub and Kite Consulting seminar at AgriScot in the wake of a catastrophic price drop in the dairy sector.
The sector is entering one of its toughest periods in recent memory, as soaring global milk production forces down farmgate prices and squeezes processor margins.
Speaking at the industry event, analyst and agricultural journalist Chris Walkland delivered a stark overview of the market, warning farmers to prepare for a prolonged period of lower returns.
According to Walkland, global milk output is rising sharply. The US is up 4%, the EU up 4.4% and New Zealand has recorded its strongest season start on record. The result is an oversupplied market, with processors in some regions dumping milk due to lack of processing capacity. “You are not unique,” Walkland told Scottish farmers. “Prices are turning down across Europe.”
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Commodity prices paint an equally worrying picture. Butter has fallen from £6600 to £4300 per tonne in a year. Cheddar is struggling too, selling for £2700-£2800, which Walkland called ‘terrible prices’. Futures markets suggest little relief ahead, with B-prices unlikely to return to stronger levels until late next year.
Industry bodies stressed the importance of maintaining consumer confidence and expanding overseas markets. Chair of AHDB’s Dairy Council, Lyndon Edwards, highlighted strong results from the ‘Let’s Eat Balanced’ campaign, delivery a 28:1 return on investment, while also emphasising growing international demand for British dairy.
“Buyers tell us they trust what the British flag is telling them,” he said.
Meanwhile, Red Tractor’s dairy sector chair Tim Lock underlined the role of robust standards in protecting the sector from both activist pressure and cheap imports. “Trust is our first line of defence,” he said.
Processors urged collaboration to keep milk moving and avoid waste. First Milk’s Mark Brooking insisted the long-term fundamentals remain strong despite record production pushing prices down.
The message from the seminar was clear, with supply outpacing demand globally Scottish dairy faces months of financial pressure. As Walkland concluded bluntly: “Nobody saw this coming.”
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