Scottish milk producers supplying Lactalis have been hit with the devastating news that their contracts are being withdrawn.

12 south-west dairy farmers - 10 in Dumfries and Galloway and two in Ayrshire - have been sent letters from the dairy giants, explaining that as of October 1, 2024, a notice period will commence, with their milk collections ceasing in 12 months time, on September 30, 2025. This leaves these producers with no outlet for the milk they are producing.

In the UK, the Lactalis Group has a strong presence - they are made of the the Lactalis UK & Ireland Group of companies and the Nestlé joint venture, Lactalis Nestlé Chilled Dairy - the effected suppliers in this case, send their milk to the Fresh Milk Company part of the Group.

Mark McKelvey, a dairy farmer from near Lochmaben who has been supplying Lactalis for almost 15 years with his 150-head herd, is one of the producers who has received a letter explaining the start of his notice period.

He told the Scottish Farmer: “We got the letter explaining the 12-month notice period, with no apparent chance to appeal the decision.

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“The are saying they have too much milk, but it seems to be that if you’re one of the ‘big boys’, you can put on as many cows as you want, and it doesn’t matter about the wee man. In this situation, it seems to be 3000/4000 litre producers that are being let go.”

Mr McKelvey continued: “I’m not saying anything bad as such about Lactalis, they’ve always been very good to deal with, but when I’m working with my father who has been milking for 60 years, it is a real kick in the teeth.

“We’re obviously talking to alternative suppliers to take our milk, but it doesn’t look promising, so where does that leave us? It is soul destroying.

“The size of some dairy farms round about us is getting beyond a joke if you ask me. They keep putting on more cows, and it doesn’t seem to stop.

It wouldn’t encourage someone to start farming and as a smaller producer it’s impossible to compete. In my opinion it’s ruining the milk job, and the farming industry as a whole.”

The Lactalis decision follows the announcement in August from the Tesco Sustainable Dairy Group (TSDG) that it is to reduce the number of dairy farmers directly supplying the retailer for its own label fresh milk which will likely see some Scottish dairy farmers lose that contract.

Chairman of the Milk Suppliers Association, Rory Christie said: “The MSA is aware of the termination of 12 members and suppliers to Fresh Milk Company. The MSA will do all it can to help its members with this dreadful situation. A number of years ago we successfully added a dispute escalation clause to the supply contract between suppliers and FMC. We have written to our affected members and explained how engage to the clause to have their case explored.”

NFU Scotland are also angered by the decision, and has asked for a meeting with both Lactalis and MSA to discuss the situation. It is also encouraging any affected farmer to reach out to NFU Scotland or the Scottish Dairy Hub should they require support and assistance.

NFUS vice president, Andrew Connon said: “Once again, it appears as though producers are to be dumped out of their current contract without clear reasoning and with few options to find alternatives in the current market. We look to meet with Lactalis and the MSA to get a full explanation of the decision.

“How can any milk producer invest, plan, and have confidence in what they are doing if they can be dropped on a whim should their milk purchaser perceive them as being awkward to deal with, geographically challenging to service or producing milk of unsatisfactory volume?

“There must be clear protocols built into contracts that protect a producer when a processor faces a challenging market for its products and passes the problem on to those supplying it.

“Without greater protection for producers in contracts, this will continue to happen, allowing processors to squeeze out some suppliers in favour of others.

“Why would anyone push to keep up with multi-decade investments when confidence in contracts only extends to 12 months? Dairy is largely an unsupported sector, with no grant schemes in Scotland supporting investment, resulting in all improvements to meet market demand coming from private investment.

“There must be greater protection for dairy farmers, which reinforces NFUS’s position on the importance of the new milk contract legislation coming into force.”

A Scottish Government spokesperson said: “This is extremely disappointing news for the farmers affected and we know that this will be a very worrying time for them. The Scottish Government has again this year provided funding for the Scottish Dairy Hub through NFUS, and we would encourage dairy farmers who are seeking information and advice to make use of it in these challenging circumstances. We will continue to keep track of this situation as it develops.”

Responding to their move, milk supply and sustainability director for Lactalis UK and Ireland, Matt Friel, said: “We have recently undertaken a review of our current milk supply. This extensive review has considered a range of factors including factory requirements, geographic location, milk quality, annual volume and supply profile, and farm assurance standards. The outcome of this review is that we have taken the decision to serve notice on 12 farms supplying our creamery in Stranraer.

“We have been in direct contact with impacted farmers and are working closely with our farmer representatives to manage this change. We will continue to work with, and support, our supplying farms over their 12-month notice period and remain fully committed to collecting milk and fulfilling our supporting obligations.”