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First Milk payment system simplified
April 16, 2018

It is all change on the milk price front for First Milk from April 1, as it simplifies its payment system around just two just two schedules – First Milk liquid and First Milk manufacturing.

The move follows member feedback and is fully supported by the co-op’s member council and board. It will see the milk price harmonised at a standard litre of 4% butterfat and 3.3% protein, with the April price on this basis being 26p per litre.

NFU Scotland milk policy manager, George Jamieson said: “NFUS has consistently believed that First Milk, as a farmer-owned business, should as far as possible have a pricing policy that is transparent, uncomplicated and treats all members, regardless of geography and end use, the same way.

“All First Milk members contribute to the business diversity so this move is welcomed by NFUS and we congratulate it for taking this step.

“The strength of a co-op is in bringing members together to draw strength in a common cause,” said Mr Jamieson. “First Milk members in Scotland have suffered from lower prices on the whole, but this move is more important than regional sensitivity as it demonstrates a commitment by First Milk to a simpler and equitable pricing model.”

NFUS has recently met with First Milk and supported this move, while also discussing other areas, such as governance and ongoing price challenges. The new governance model with a new council and board structure and a new chief executive was, said the union, ‘making progress’, but it would ultimately be farmer owners who decide if it is working for them, which would be judged on the price paid.

“On price, First Milk’s new price of 26ppl is disappointing but not out of line with other processors,” he conceded. “The drop does not reflect the new pricing model, but the downturn in the dairy market, which NFUS believes should be at the bottom of the curve.

“First Milk, must pay as much as it can based on its markets and costs regardless of competitors pricing, and over the last two years it is pleasing for hard pressed First Milk farmers to see the gap in prices between First Milk and competitors closing.”
Looking ahead, commentators and futures indicators are cautiously suggesting that the recent milk price drops may be at an end, although the union maintained that farmgate prices last year did not reach the levels that were justified by the market, and that the subsequent slide back to unsustainable farm gate prices had been too speedy.

“Milk pricing remains at the discretion of milk processors, who under intense pressure from competitors and retailers have the reassurance that they have the power to set the price they pay for their primary product and largest cost,” said Mr Jamieson. “This is not an acceptable nor efficient way for any supply chain to be sustained.

“While the Grocery Code adjudicator has declined to include the primary producer under its remit, it has acknowledged the strong evidence supplied by NFUS and our counterparts south of the Border that dairy farmers and the supply chain needs additional measures. Defra has committed to introduce mandatory contracts with minimum standards in the dairy sector and will consult soon. NFUS is fully committed to this and strongly urges all with the best interests of the dairy sector to engage and support this move.”

 

Source: The Scottish Farmer



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Spring 2018