Dairy farmers across Scotland are facing a severe financial crisis as the price they receive for milk has fallen below the cost of production, threatening the viability of their businesses.

Adam and Lucy Johnstone, who took over a dairy farm in south-west Scotland two years ago, experienced a significant drop in profitability. The price they received from dairy giant Arla for each litre of milk plummeted by 25% in the last three months, falling below their production cost. The Johnstones now face the prospect of selling their farm if they cannot find a way to make milk production profitable. Currently, it costs them 38.5p to produce a litre of milk, but they are only receiving 35.7p per litre.

The National Farmers Union for Scotland (NFUS) described the recent downturn as "unprecedented" in both speed and scale, although the sector is accustomed to fluctuating prices. Arla attributed the price slump to a global oversupply of milk combined with flat demand for milk and dairy products like cheese and yoghurts. This imbalance between supply and demand has created a challenging market environment for dairy farmers.

The dairy industry plays a crucial role in the Scottish agricultural sector, contributing significantly to the rural economy. Dairy farms not only provide milk but also support related industries such as feed production, transportation, and processing. The current crisis threatens the livelihoods of dairy farmers and could have wider implications for the agricultural sector and rural communities.

Looking ahead, dairy farmers may need to explore alternative strategies to improve their profitability. The Johnstones are considering selling their milk directly to local customers, which could potentially increase their revenue. Other options include diversifying into value-added dairy products, improving efficiency to reduce production costs, or exploring government support programs. The future of dairy farming in Scotland depends on the ability of farmers to adapt to changing market conditions and find sustainable business models.