Milk processing giant Müller’s decision to serve notice and charge tiered haulage fees will have a “devastating” impact on Scots dairy, challenging the viability of many farm businesses, NFUS has said.
Yesterday (October 31), the processor announced it would serve notice to 14 Aberdeenshire suppliers as part of a series of measures to reduce its milk pool in Scotland.
Müller, which is supplied by 230 Scottish farms, claims it has seen an “unprecedented 25% surge” in milk produced by its Scottish farms.
However, the union warned it was a sign of bigger supply chain issues within the industry.
The review, which was launched a month ago, aimed to reduce in the overall milk volume which the firm currently purchases in Scotland.
Haulage charges
As part of the plans, Müller will also introduce a scaled transport charge to offset the cost of moving surplus Scottish milk to markets in England.
That review will now see most Scottish suppliers face new haulage charges on all litres produced.
Depending on the volume of milk a Muller supplier has produced in 2019, when compared to 2017, they face new haulage costs of:
- 0.25p/L where volume has increased by 5%;
- 0.55p/L for a 15% increase; and
- 0.85p/L for a bigger than 15% increase.
The haulage charges, which are set to come into effect in February, will be subject to annual review. However, will amount to a significant cut in farm income.
Muller suppliers south of Aberdeen, who have seen their milk hauled to the central belt since the closure of Muller’s processing plant in Aberdeen, are unaffected by this new announcement although they currently have a haulage charge of 1.75p/L.
National Farmers’ Union Scotland (NFUS) president Andrew McCornick said: “This is clearly devastating news and the livelihoods and viability of all those Scottish dairy farmers supplying Muller have been undermined by the outcomes of this review.
“None more so than the 14 dairy farmers in Aberdeenshire who have just been served 12-month notice by the company.
Given the considerable commitment and investment made by dairy farmers, we now have producers looking to find a new buyer in the next year if they wish to continue milking cows while others, through haulage charges, face a significant cut in income at a time when milk prices are struggling to cover the cost of production.
“For those served notice, Muller is having a face-to-face meeting with these farmers in Aberdeen next week and NFU Scotland has asked if we can attend to support those farmers affected.
“Since Muller made its original announcement, NFUS has been in – and remains in – regular dialogue with several stakeholders in the sector in Scotland and beyond, including Scottish Government, in a bid to offer solutions to this announcement.
It is a further sign of deep-rooted issues within the UK liquid milk market.
“As part of a joint UK union initiative, NFUS last week sent a letter to Rt Hon. Neil Parish MP, Efra Committee chairman demanding an urgent, short-life investigation by Westminster into fresh milk to determine what has led to the recent destabilisation of the UK liquid milk market.
“NFUS has been offered full support on this issue from our colleagues in the NFU in England and Wales. NFUS will meet senior officials from milk processor body, Dairy UK, next month to discuss issues surrounding the dairy supply chain in Scotland.”
