Page last updated at 23:17 GMT, Tuesday, 26 May 2009 00:17 UK

Dairy discussions hope to deliver

The difficulties facing the dairy industry are the subject of a summit in the Scottish Parliament

By Giancarlo Rinaldi
South of Scotland reporter, BBC Scotland news website

The Scottish Government has heard the problems facing the dairy industry during a special summit at Holyrood.

It followed a farmers' protest about the price they receive for their milk as well as a closure announcement at a factory in Dumfries and Galloway.

The event was organised in recognition of the "increasing pressure" facing the industry.

Farmers, processors and retailers were all invited to attend the event at the Scottish Parliament.

Jimmy Mitchell, who farms near Kelso in the Scottish Borders, said the message from the agricultural world was a simple one.

He said they did not want a penny more from the public when they buy a pint of milk.

Instead, they hoped to squeeze a few extra pence a litre out of the supermarkets.

Farmers protest
It's nonsense to say supermarkets are not supporting dairy farmers
Richard Dodd
Scottish Retail Consortium

Otherwise, he warned, fewer and fewer children of dairy farmers would be inclined to follow their parents into the industry.

Mr Mitchell has been farming for long enough to have seen its highs and lows.

However, he said the situation was getting pretty desperate for many of his colleagues.

"What is so annoying is that the price for the farmer is being reduced quite significantly," he said.

"Yet the retailers are keeping on increasing their profits all the time."

He said that was bound to make the job less attractive for future generations.

"What is happening is that farmers' sons see their father and mother working seven days a week for not a lot of return," he said.

"The young ones are saying 'I am not going to have a life like that'."

'Sort things out'

Mr Mitchell, who is due to attend this week's summit, said that just a few pence more a litre could make all the difference.

"There is no need for customers to pay any more at all," he said.

"If we could just get another three pence a litre, that is all we are asking for."

He claimed that was a small amount compared to the profits being made by supermarkets.

Mr Mitchell would also like to see an independent body set up to oversee an industry which he said had given him "quite a good life".

"The processors are so frightened to speak out against the retailers," he said.

"And they do not want you to say anything against them.

"We need an ombudsman to try to sort things out."

That move is opposed by the Scottish Retail Consortium which represents the supermarkets.

Spokesman Richard Dodd confirmed they would not be attending the summit in the Scottish Parliament due to "competition issues".

Milk Link factory
Milk Link has announced plans to close its Kirkcudbright plant

However, he defended the record of retailers in backing the agricultural industry.

"It's nonsense to say supermarkets are not supporting dairy farmers," he said.

"In fact they're paying over the odds.

"The industry's own figures show eight of the UK's top 10 highest-paying contracts for milk are direct contracts between retailers and farmers."

He added that attempts to regulate the industry further would be resisted.

"Customers' interests are best served by a competitive market," he said.

"The last thing needed at any time, let alone in a recession, is a new multi-million pound regulatory bureaucracy - unnecessarily piling on costs and pushing up shop prices."

Dairy UK, which represents processors such as Milk Link, which is proposing to close its Kirkcudbright plant with the loss of 121 jobs, is also unconvinced by moves for an ombudsman.

Scottish director Kirk Hunter said they were "not enthusiastic" about anything which could increase the amount of red tape.

He said there were other ways to tackle the problems facing the dairy sector.

"We are certainly going through a very challenging period for the industry," he said.

"The focus has rightly been on the health of the dairy farming sector because the entire industry, the entire supply chain through to the consumer is underpinned by the primary producer.

"If we are to have a viable and sustainable industry then we must have a healthy production base."

Mr Hunter said milk production was in decline across Europe and prices were volatile due to deregulation and the influence of global markets.

'Increasing prosperity'

"Everybody in a free market is working to try to make a margin on which they can live and the producers are no different to that," he said.

"We need to focus on getting into more added-value markets, we need to focus on being innovative and greater efficiency right throughout the supply chain.

"We need to co-operate and collaborate more effectively."

If that could be achieved, he said, he believed the future could still be bright for the dairy sector.

"There is some pain that the industry is going through at the moment and nobody should underestimate how difficult things are at the moment for dairy farmers," he said.

"But we have got increasing prosperity across the world and consumers looking to increase their dairy consumption.

"Across the world there should be a growth in the dairy industry and because we in Scotland are efficient in the medium and long term we should do quite well out of that."

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