Isle of Man Creamery’s boss says there are no plans to follow a Minister’s call to increase the price of milk by a penny a litre.
Giving evidence to the Environment and Infrastructure policy review committee before Christmas, Agriculture Minister Phil Gawne said putting 1p on a litre of milk would ‘completely overshadow’ any support to dairy farmers that could be given through the Countryside Care Scheme.
He said this would be equivalent to an increase in income of £60 per acre.
But Findlay Macleod, managing director of Isle of Man Creamery Ltd, ruled out such a price rise, for the time being.
He told the Examiner that the Minister might be correct in arguing that the milk price received by dairy farmers has a far greater impact on farmer income than direct government subsidy.
But he added: ‘A proportion of any increase in the retail price of milk always feeds back to the island’s dairy farmers. However, at present, the Creamery has no intention to apply for an increase in the retail price of milk – the retail price of milk is regulated and discussions with DEFA and the OFT would precede any decision by the DEFA Minister to allow a price increase.’
During his evidence, Mr Gawne said the Creamery had taken £0.5 million out of its cost structure.
Mr Macleod said: ‘We have traded through an extremely challenging period and reduced our overheads significantly more than this figure.
‘We have also obtained several new contracts which have improved the profitability of our sales. This has enabled us to give a commitment to pay our dairy farmers a standard litre price of 31p per litre from last summer, right through to the end of 2014.
‘However, like all dairy companies, we still face huge challenges to pay our producers a viable price for their milk and to retain sufficient profit within the business for re-investment. Five dairies in the UK of a similar size to Isle of Man Creamery have ceased production in the last 18 months.
Mr Gawne told the scrutiny committee that his department had offered a loan to the Creamery but this had been rejected by the company directors.
Mr Macleod said it would be wrong to repeat discussions between government and a privately owned company when no taxpayers’ money was committed.
But he added: ‘However, I can confirm that we are not seeking and have never sought a government subvention. As a business, our cash flow has been robust and positive and we traded at a small profit in 2013.’
The Minister also claimed the Creamery needed to be more transparent. But Mr Macleod insisted: ‘We have always been as transparent as we possibly can be with all departments of government. We report in great detail to a wide variety of stakeholders including departments, dairy farmers, staff and our bank.’