Orkney Milk cuts 4p/litre off purchase price

(Glasgow Herald) -- Producers seeking higher prices for their milk had a warning shot fired across their bows when farmer owned co-op Orkney Milk cut the price it pays its 23 members by 4p per litre to 24p.

The few remaining milk producers in the Orkneys are all members of the co-op which supplies Orkney Cheese and which is 70% owned by farmers, 20% by Lactalis and 10% by the Orkney council.

Orkney milk producers have the highest costs of production in the UK and the low milk price is a threat to their viability.

Laying the blame for the price cut at the door of the supermarkets, Marcus Wood, chairman of Orkney Cheese and a milk producer on South Ronaldsay, said: "The cheese market is shaky at the moment and the price cut was a prudent move to keep our cash flow right."

Wood explained that the price cut was simply a seasonal adjustment and pointed out that this time last year the islands' producers were getting 20p per litre plus a quality bonus of 1p per litre.

"This year our quality bonus is 1.5p per litre on top of the 24p per litre basic price. There was also a "thirteenth" bonus payment at the end of last year worth a penny a litre and if we pay the same again this year it will leave producers with a summer milk price of 26.5p."

Wood pointed out that in addition to supermarkets exerting downward pressure on the price of cheese there were also increasing costs pressures from the likes of soaring electricity and fuel.

"Our electricity costs have gone up by 50% as we have just come out of a three-year contract," Wood added.