NFU Scotland has met with First Milk to discuss the farmer-owned businesses’ turnaround plan and what that means for its Scottish members.
The company’s strategy has seen welcome progress with First Milk recording an operating profit and establishing a stronger financial footing. However, First Milk continues to operate in a highly volatile dairy market and, like most other milk buyers, returns to its dairy farming members remain unsustainably low.
The company operates creameries in Campbeltown and on Arran, with those supplying those sites receiving a price based on returns from the cheese market. The majority of Scottish First Milk members are on a balancing contract, where milk is sold on a brokerage basis rather than supplying a specific processing site.
Regardless of who a producer is selling their milk to, the Union believes virtually all Scottish dairy farmers are vulnerable at current price levels.
With a new board structure recently put in in place, NFU Scotland welcomed First Milk’s commitment to raising the milk price and closing the gap on competitors as soon as returns from the market allow. And as part of the governance process, the Union heard that the recruitment process to appointment a chair to First Milk’s new farmer-based council is underway, an important position given the council’s role in representing members.
Speaking after the meeting, NFU Scotland President Allan Bowie said: “NFUS is acutely aware of the pressures on all in the dairy sector and the price currently being paid to First Milk’s Scottish members puts them at the sharp end of that.
“The improved financial performance and the return to an operating profit at First Milk is to be welcomed. Given the current turmoil in the sector, our dairy farming members supplying First Milk are desperate to see that strategy of improved business performance deliver substantially better returns back to the farm gate.
“Whether those members are in Kintyre, on the islands or in First Milk’s main Scottish milk field, they are vulnerable and exposed at current price levels.
“There is to be investment in Campbeltown creamery that will underpin the production of quality Mull of Kintyre cheese and we want First Milk to continue to engage with all local stakeholders on a strategy that adds certainty to that creamery’s future.
“For those in the main Scottish milk field, as part of a farmer-owned business, they see investment in processing taking place elsewhere in country while they will receive a price based on returns from balancing, brokering and the spot market. If balancing is a critical cog in the First Milk business plan, then those supplying that market must not be disadvantaged by the lack of a designated processing outlet for their milk.
“Now that First Milk are in calmer financial waters, the balance between sustaining the business and farmers being able to continue dairying is important. Whether at Campbeltown, the islands or central Scotland, First Milk must continue do all within its power to deliver for its Scottish members.
“NFUS will continue to work with First Milk in any way we can, as its future success is integral to the Scottish dairy sector moving forward. If any of our dairy farming members supplying First Milk would like further details on the meeting, we would welcome their call.”
