Some UK farmers are not only being paid less for their milk; this month the largest farmer-owned milk processor announced that milk cheques will in future arrive two weeks later.
First Milk, Scotland, is also asking farmer shareholders to fork out more money to prop up the co-op’s balance sheet.
First Milk chairman and former UK Food and Rural Affairs Minister Jim Paice stunned farmers on January 2 by announcing that from February 1 farmers will receive 3c/L less for liquid pool milk and 5c/L less for manufacturing pool milk.
Following a backlash from farmers and industry leaders, First Milk backed down, revising it to a 3c/L reduction for manufacturing pool milk and a 1c/L reduction for liquid pool.
Other milk processors have also cut prices; Danish cooperative and the UK’s largest dairy, Arla, is now paying farmers 52/L. In early 2014 milk fetched nearer to 66c/L for UK farmers.
Paice, who remains an MP in UK, says at farmer meetings held two months ago, the First Milk board was open about the losses that were accrued in the early months of this financial year as the company dealt with rapidly falling markets.
First Milk has decided to rebuild the fundamentals of the business ahead of the spring flush, he says, injecting more cash into the business to strengthen it for the spring flush.
“We understand that the milk payment deferral will cause concern for members as direct debits and payments will have been lined up against milk cheques.
National Farmers Union UK president Meurig Raymond says the timing of the announcement meant a serious burden for farmers and damage to cash flow at an expensive and demanding time of year for costs.
While it is paramount that the financial stability of First Milk is secured, the co-op must meet farmers and explain the rationale behind the changes.
“Make no mistake, I have heard from NFU members, some who are extremely anxious and I have taken those views to the chairman of First Milk during discussions.
The Scottish Government says it is watching First Milk’s moves to strengthen its balance sheet.
NFU Scotland president Nigel Miller says the changes will place extraordinary pressure on many dairy farms in Scotland.
First Milk facts
First Milk is the UK’s only major dairy company, 100% owned by British farmers, supplying dairy products and ingredients to national and international markets.
Its products include block cheeses, soft cheeses, raw milk, butter, skimmed milk powder, whey proteins and sports nutrition brands.
It generates annual revenues of $1 billion. Headquartered in Glasgow it has seven manufacturing sites in England, Scotland and Wales.
