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

The Johnstone family, who took over a dairy farm in south-west Scotland two years ago, exemplify this struggle. They are now receiving 35.7 pence per litre of milk from dairy giant Arla, while their production costs stand at 38.5 pence per litre. This 2.8 pence deficit per litre has forced them to consider drastic measures, including selling their milk directly to local customers or exiting the dairy farming industry altogether. The Johnstones previously enjoyed a comfortable profit, but the recent 25% drop in milk prices over the last three months has erased those gains.

The National Farmers Union for Scotland (NFUS) described the current situation as "unprecedented" due to the speed and scale of the price downturn. Arla attributed the slump to a global oversupply of milk, coupled with stagnant demand for milk and dairy products. This imbalance has created a market where supply significantly outweighs demand, driving prices down to unsustainable levels for many farmers.

Dairy farming has historically been subject to price fluctuations, but the current crisis is particularly acute. The industry operates within a complex global market influenced by factors such as weather patterns, international trade agreements, and consumer preferences. Dairy giants like Arla play a significant role in setting prices, but they are also subject to market forces beyond their direct control. The current situation highlights the vulnerability of dairy farmers to these external pressures.

Looking ahead, the future for Scottish dairy farms remains uncertain. If the global oversupply persists and demand does not increase, many farms may face closure. Alternative strategies, such as direct sales to consumers or diversification into other agricultural products, may offer a lifeline for some. However, these options require significant investment and adaptation. The long-term sustainability of the Scottish dairy industry hinges on addressing the underlying market imbalances and finding ways to ensure that farmers receive a fair price for their milk.