Müller confirms measures to address growing milk surplus in Scotland

An unprecedented 25% surge in Scottish farm milk production which is substantially in excess of local demand for fresh milk from consumers, is to be addressed by Müller Milk & Ingredients.

Following a month long review, the company will introduce measures to tackle the problem, which has seen Müller’s 230 Scottish dairy farmer suppliers cumulatively increase production since 2014 by the equivalent of 33 litres of additional milk per annum for every person in Scotland.

Surplus milk is currently being transported by Müller to England where markets can be found for it, resulting in more than 6,000 tanker movements travelling a total of 2.5 million miles each year.

Measures to be introduced by Müller include a reduction in the overall volume of milk purchased in Scotland. Regrettably this will be achieved by serving a full year’s notice on a number of dairy farm suppliers in the North East of Scotland.

Müller will also introduce a tiered transport charge for dairy farmer suppliers in Scotland from February 2020 with the fastest expanding dairy farmers shouldering a proportionately higher charge than those who have grown production more modestly.

Rob Hutchison, Milk Supply Director for Müller Milk & Ingredients said:

“We fully appreciate that these measures will be extremely unwelcome and destabilising for our farmer suppliers particularly in the North East of Scotland, but the current situation is unviable and we must act.

“We completed the largest single investment in fresh milk processing in Scotland in more than a decade at our dairy in Bellshill last year and we will continue to do what we can to stimulate new demand for fresh milk.

“But with fresh milk already in 96% of the nation’s fridges and overall consumer demand for the product in marginal decline, the reality is that it is extremely unlikely that this sector will soak up the heightened levels of milk production from farms which we have seen.

“Our farm services team will now work closely with affected dairy farmers and we will do everything in our power to help them adjust to the changes which we must now make.”

During the review period, Müller sought views and input from the Müller Milk Group farmer board elected to represent dairy farmers, National Farmers Union Scotland and Scottish Government.

Ends…31 October, 2019

Issued by Graeme Jack, Communications Director, Müller UK & Ireland Tel 01355 598585 or 07900 430269.

Note to Editors

1. Serving Notice -Müller will exercise its contractual right to serve 12 months notice to 14 dairy farmers in the Aberdeenshire area, North of Aberdeen. These dairy farmers are located in areas which present heightened or complex logistical transport challenges for Müller. Should dairy farmers who are affected find an alternative buyer in advance of the end of their notice period, the company will support an earlier move. Affected dairy farmers have been contacted directly by the Müller farm services team.
2. Transport Charge for Surplus Volumes - Dairy farms who supply Müller in Scotland which have increased production to the greatest extent will shoulder a higher cost than those who have not:

• Greater than 15% expansion – 0.85ppl on all litres produced
• Above 5% to 15% expansion – 0.55ppl on all litres
• Up to 5% expansion – 0.25ppl on all litres
• Base year for calculation – 2019 v 2017 actual 12 months production
• The charge will apply across all farms and groups except Aberdeenshire farms who already pay a transport charge
• Charge rates will be reviewed annually with changes in customer demand and farm supply volumes reflected in the review