Turnaround plan success crucial to Scottish dairy sector

NFU Scotland has met with dairy co-operative First Milk to discuss the company’s important plans for turning around its business.

Faced with exposure to falling commodity values, the firm has been forced to cut prices on a number of occasions in recent months. The majority of Scottish suppliers to First Milk are to see prices cut by a further 0.2p per litre for June while those on the Isle of Bute will see prices cut by 1.2p per litre. For June, the standard litre price before deductions for Scottish First Milk producers will be: Mainland Scotland – 20.3p; Campbeltown – 20.67p; Arran – 20.67p and Bute – 19.3p.

The cuts were announced as part of a wholesale business review, revealed by new Chief Executive Mike Gallacher. The business plan includes cost reductions across First Milk, including job losses primarily at its Glasgow head office; a change to milk pricing policy and sales refocused on UK contracts. The price for producers on Bute has been most severely affected due to the costs associated with transporting milk off the island. NFU Scotland and First Milk have been pressing Scottish Government to extend existing subsidised ferry transport to milk tankers and a meeting with Transport Minister Derek MacKay will be held on the island next week.

NFU Scotland met with First Milk CEO Mike Gallacher, Chairman Sir Jim Paice and directors Willie Campbell, Jim Baird and Paul Flanagan at NFUS HQ, Ingliston this morning (12 May). They were joined by James Withers of Scotland Food & Drink; Paul Grant of the Scottish Dairy Growth Board and James Graham of Scottish co-operative body SAOS.

Following the meeting, NFU Scotland President Allan Bowie said: “It was clear that as First Milk’s new CEO, Mr Gallacher has a clear grasp of what is required to turn the company around and return a viable milk price back to its members as quickly as possible.

“He has recognised the issues that exist across the whole business and we accept that some of the fundamental problems he has identified will take some time to address. For First Milk members, the current price they are receiving remains wholly unacceptable and unsustainable. Come the autumn, when cows are coming inside and costs are increasing, First Milk members must have grounds for confidence and trust that the turnaround plan is progressing.”

“Importantly, Mr Gallacher gave reassurances that Scotland and its producers are part of his vision for First Milk. We will look to hold him to that and we urge all First Milk members to take up the opportunity to hear and question Mr Gallacher at the member meetings being held in Fenwick and Campbeltown tomorrow (13 May).”

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