Growth for Scottish Dairy Sector

The Union believes there are realistic opportunities to grow the Scottish dairy sector and is working with Scottish Government, Scottish Development International (SDI), Scotland Food & Drink and Dairy UK to map out the opportunities for growth both at home and abroad.

For that to happen, it is equally important that the balance of risk and rewards in the supply chain is shifted. The Union is working on Defra’s proposed voluntary Code of Practice for the sector to ensure it delivers the necessary fundamental shift in the balance that exists in the current contracts between many producers and their milk buyers.

Speaking at the Highland Show, NFUS Vice President Allan Bowie said: "The signs are that we are already pulling out of the current lull in demand for dairy products and there is general consensus that mid- to long-term prospects for milk and dairy will once again outstrip demand. That means there are clearly opportunities, but only for those with the ambition and foresight to collaborate, innovate, and be outward looking. Others around the world are already on that path, and I want Scotland to join them.

"The level of efficiency in our producer base means that we can compete with the best and by working with those who are committed to a Scottish dairy strategy, I believe we can make the most of the opportunities to grow our domestic market. We can add higher levels of value to our produce and tap into wider commodity markets elsewhere. We want all our existing milk processors to buy into that vision but let’s also show would-be inward investors the potential that exists in the Scottish milk fields.

"We need to build momentum. The dramatic dip in milk prices that hit all dairy farmers in May was a blow to confidence levels. With commodity and auction prices now stabilising and improving around the world, we will be looking to our milk purchasers to start increasing farmgate prices just as quickly as they were prepared to slash them months ago. We are acutely aware of the pressure on milk price relative to the input costs on farm, and an event like the Highland gives us the opportunity to keep up the regular contact we have with all milk purchasers.

"The short term is clearly crucial, and beyond that we have invested a great deal of time and effort into how the dairy sector can move forward with more confidence. Defra’s proposed Dairy Supply Chain Code of Practice and the EU dairy package both have potential to improve the dairy sector, with more effective contracts and improved balance of risk and reward – but we are not there yet.

"Both these initiatives acknowledge that, for the majority of producers, the dairy supply chain does not work. The balance of risk and reward is not evenly shared and producers continue to carry the greatest burden. Both these initiatives are also very clear that the solution is more effective contracts and increased producer-negotiating power.

"The Code of Practice is at a crucial juncture and the next few weeks will be critical. We will work hard to ensure that it emerges as a progressive consensus that delivers the necessary changes the sector requires to encourage processors, Co-ops and farmers to be confident in the future. Our dairy farming members expect no less.

"The reward for the dairy sector in Scotland would be the opportunity to grow the sector at processor and farmer level. Dairy is such an important part of the Scottish agricultural industry. It generates significant revenue and employment, at production and processor level, and beyond this in the wider rural economy.

"We initiated a working group with willing partners in Scottish Food and Drink, Scottish Development International, Scottish Government and Dairy UK (Scotland) to develop a strategy for Scottish dairy. These are exciting times for the dairy sector and we want to ensure that the Scottish industry is in a position to react to the opportunities that emerge."