Bute dairy farmers ‘betrayed’ by new milk price cut

Dairy calves on Bute.
Dairy calves on Bute.

Dairy farmers on Bute have been betrayed by their own company after being singled out for yet another milk price cut, according to the island’s MSP.

Michael Russell was responding to news that farmers’ co-operative First Milk is to cut the price it pays to Bute’s dairy farmers by 1.2 pence for a litre of milk from June 1.

The cut is six times that which will be imposed on First Milk members on the Scottish mainland from the same date - with the company blaming the Bute decision on the additional cost of transporting the island’s milk to processing facilities elsewhere.

On Friday morning, First Milk published a news release with details of a ‘turnaround plan’ which it said was aimed at “providing a better return to farmer members”.

That news release made no mention of the impact the new plan would have on the company’s Bute farmers - but at the same time the company was informing the island’s 13 dairy farmers directly of the 1.2ppl price cut.

Mr Russell said: “I was horrified to be notified this morning by farmers that a further cut to the price they receive was going to be announced today.

“First Milk claim their ‘turnaround’ plan requires them to take 0.2p more off the price of a litre supplied by Scottish farmers though no such reduction is to apply to Welsh farmers.

“As the price paid is already below the cost of production this is a further serious blow to Kintyre. However to add insult to injury the price being paid by the company to dairy farmers on Bute will fall by 1.2p from the first of June, with the company citing ‘freight costs’ as being the reason.

“In reality this is a cynical attempt by First Milk to blackmail the Scottish Government into further transport subsidies, with the benefit going not to farmers, but to the company. It is also a cruel betrayal of the Bute farmers who have supported their own co-operative over many years.

“There is tremendous anger today on Bute and further afield. I spoke to the company this morning and told them that I regarded their actions as absolutely unacceptable, and have also had a telephone conversation with Richard Lochhead who was as horrified as I was.

“I am taking a delegation of Bute farmers to see the Transport Minister on May 12, which is the same day as Richard Lochhead is due to meet First Milk. There will be an unequivocal message from all of us to the company on that day - reverse these appalling decisions, and apologise for them.

“I will also press the Government hard for immediate help with transport costs, though we need to find a way to ensure that the money does not go into the pocket of First Milk but instead into the dairy farms on Bute.”

In an email to members, which has been seen by The Buteman, First Milk chairman Sir Jim Paice MP said: “The desire expressed to us by Bute members is for your milk to go into Campbeltown creamery on a permanent basis. We are looking closely at the costs of doing this along with other options for milk from the island. When this work is completed, we will ensure that we share it openly with you, to inform our discussions.

“However this does not alter the main challenge that faces milk produced on the Isle of Bute. That is, that it needs to travel by ferry to the mainland and hence it incurs an additional cost to that of our other Scottish milk.

“From 1 June this additional cost will be allocated just to the volume of milk which is produced on the island. So taking into account further weakening of markets being predicted for June, as well as the additional transport costs, this means that your milk price will fall by 1.2ppl. So your standard litre milk price from 1 June will become 19.30ppl.

“Additionally, the Board have confirmed the B price for April at 16.1ppl and also that based on our projections the B price range for June will be 14-17ppl.

“We fully appreciate the very serious concerns that members on Bute will have. A senior project team is working with a number of parties including the Scottish Government to urgently develop potential solutions to reduce transport costs and increase the market value of your milk.”

NFU Scotland president Allan Bowie held a telephone discussion on Friday morning with First Milk’s new chief executive, Mike Gallacher, on the detail of the plan.

Afterwards Mr Bowie said: “We can appreciate that restructuring and turning around a business often means pain, but for Scottish dairy farmers supplying First Milk these further cuts will place them in a hugely difficult position.

“We know that a number of First Milk members have already taken the difficult decision to walk away from milk production and those that remain have some challenging business decisions to make.

“Given that this is a co-operative, it will rankle with many Scottish producers the price differential now opening up between those supplying different parts of the First Milk business. Many Scottish First Milk suppliers are staunch, lifelong supporters of co-operation, with an expectation that pain and gain should be shared.

“For Kintyre and Bute, where dairying is a huge part of the local economy, First Milk has put a taskforce in place to support the Campbeltown creamery in the coming months and drive forward the marketing of Mull of Kintyre cheddar. That part of the business plan must be given an appropriate time to bed in and also allow the planned improvements to the creamery to be completed.

“For those on Bute, these savage cuts have simply strengthened our resolve to have Scottish Government support ferry transport costs immediately, rather than holding off for a review in the autumn. We hope the transport minister has an appropriate response when we meet in Holyrood.

“The Union is also meeting Mr Gallacher later this month and we welcome the opportunity to discuss his turnaround plan, and its implications for Scottish producers, face-to-face.”

Mike Gallacher said: “None of the decisions announced today have been taken lightly, but they are necessary steps in the process of rebuilding a secure and stable future for First Milk, its members and its employees. As a team, our aim will be to provide every support for those impacted in the coming months.

“First Milk plays an important role in many rural communities across the UK and continues to value the support it has received from all our stakeholders. Our strategy is aimed at continuing to restore the health of First Milk so that we can support those communities through delivering better prices for their milk.”

The Buteman has contacted First Milk seeking a comment with specific reference to Bute, and will publish it here as soon as we receive it.