The money we earn by selling our milk does not cover our costs

When Adam and Lucy Johnstone took over a dairy farm in the southwest of Scotland two years ago, they were able to turn a comfortable profit on the milk produced from their herd of 60 cows.

But in the last three months the price they get for each litre of milk from dairy giant Arla has fallen 25% below the cost of production.

They are now considering selling their milk directly to local customers in nearby Moffat or abandoning the farm.

This is an issue that is affecting dairy farmers across Scotland. The National Farmers Union of Scotland (NFUS) said the sector is accustomed to price fluctuations, but the recent decline is “unprecedented” in both speed and scale.

Arla blames the price decline on a global oversupply of milk. Meanwhile, demand for milk and dairy products like cheese and curd has remained stable.

Johnstones say it costs them 38.5p to produce a litre of milk.

but they are currently getting 35.7p a litre from Arla.

This means that if they produce 35,000 litres per month, they will be paid £12,495 – which is around £1,000 less than it costs to look after their herd.

Lucy said that although farmers are resilient, the pressures they face are not sustainable.

“As an industry, we have become used to taking losses, and that’s OK because at other times of the year, we make a little more money,” he said.

“I find it difficult to make it okay for us not to cover the costs it costs us to produce the food we are feeding the country.”

The couple are now exploring the option of selling milk directly to customers in addition to their existing contract with Arla.

He said the support shown by local residents, hoteliers and businesses reminds him that the country’s farmers are appreciated, but ongoing tensions have forced him to consider leaving the industry.

Adam said, “It’s soul-destroying, to be honest. There are many benefits of farming that are not financial – we have a great lifestyle and we get to spend a lot of time with the children.

“But the financial pressures persist day after day and don’t go away when you go to sleep. We have talked many times about getting out of farming.

Milk production in Britain is expected to exceed 13 billion litres for the first time this year.

Meanwhile, prices for mild cheddar, butter and skimmed milk powder are hitting their lowest level in five years, according to NFUS.

Big dairy processors, such as Arla, Muller, and First Milk, have been cutting the price they pay farmers for their milk for several months, saying it is in response to global markets.

They are facing pressure to collect, process and sell excess milk that far exceeds consumer demand.

An Arla spokesperson said, “Global milk production has increased so there is a high supply of milk around the world. Therefore, this is having a negative impact on global commodity markets, resulting in lower prices.

“As a co-operative owned by the same farmers who supply our milk, Arla’s profits go directly back to our farmers as payment for their milk and to support the future of dairy production.”

Muller confirmed that their “daily milk collection volume is still much higher than last year.”

Mike Hindle, communications director for First Milk, said the dairy industry’s challenges were complex.

“We make a lot of cheese and some of it is exported,” he said.

“There has been a change in trade flows in the global cheese market, with more cheese coming from the US and New Zealand to the UK and Europe.

“They are producing at lower prices for various reasons and hence there is value loss in those markets as well.”

NFUS is demanding trust, transparency and fairness throughout the supply chain.

Committee chairman Bruce McKee said: “Processors must communicate clearly and fairly with suppliers.” Farmers deserve transparency and trust at such a critical time.”

The dairy industry has recently attracted some significant investment, such as Arla’s £144 million Upgrade your processing plant in Lockerbie.

NFUS vice president Robert Neal said it reflected a long-term commitment to the industry, but more help was urgently needed to stabilise the situation.

“This is about more than milk – it’s about rural jobs, local food security and the future of our communities,” he said.

“The supply chain must share the risk, not just the reward.”

Meanwhile, the Johnstones say they are in “survival mode”.

Adam is a former Marine and is disabled. He wears a prosthetic leg and regularly has his doctor advise him to rest when he has pain.

However, Lucy said that financial pressures mean Adam is struggling with pain and it is now impacting family life.

“We’ve got two young kids he loves to hang out with and he’s giving everything he has to that farm right now,” she said.

“It’s not to pay us well; it’s to keep us afloat. It’s a way to survive and it’s not fair to him.”