A PRICE war in the supermarkets is the last piece of news dairy farmers want to hear but, according to NFU Scotland, that is what is taking place and the primary producer is the main loser.
Yesterday, the union backed up its case by saying those leaving the industry were doing so at a rate that was now only exceeded in the 1970s, when many dairymen gave up.
Recently, the Scottish Dairy Cattle Association reported that 38 Scottish dai
ry herds were dispersed in the first half of 2010, compared to 41 herds in the whole of 2009.
On a UK scale, latest census figures indicate that in June 2010 there were 16,080 dairy farmers, down nearly 700 (4.2 per cent) on 2009 and 12,300 (43 per cent) fewer than ten years before. There were nearly 200,000 dairy farmers in the UK in 1950.
Union vice-president Allan Bowie said the statistics spoke for themselves. "The number-one reason Scottish dairy farmers continue to leave the industry is because it is financially unsustainable.
"This erosion of producers comes despite milk sales growing as overall sales of pasteurised fresh milk have been increasing by 0.8 per cent each year since 2006. During the same period, the discount retailers' market share has roughly doubled, which appears to have sparked the reduction in milk prices now being seen in major UK supermarkets."
The union produced figures showing some of the supermarkets pricing policy. These included Tesco selling Wiseman's Fresh'n'lo brand at 25p per litre which is 2p per litre below the figure from its own consultants on the cost of production. Another supermarket, according to the NFUS, Asda is offering all its 2.272 litre (four pints) bottles at two for £2.
Meanwhile, dairy farmers will shortly face the financial consequences of the global rise in cereal prices. Already it is claimed that feed costs have risen by 1p per litre in the past week.
Bowie stated the profits of retailers continued to be strong, but competition between the major supermarkets and their discount rivals, while it may appear in the short term to be in their customers' interest, was undermining the nation's ability to produce one of its staple foodstuffs.
"Time and time again the profits posted by the major retailers indicate that there is more than enough of a financial cushion for them to feed back a sustainable return along the supply chain to their producers.
"We have heard numerous statements from the retailers of their intentions to work with the industry for the good of all concerned, but price turf wars such as this show their priorities lie elsewhere.
Source: the scotsman
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