THIS has been an extremely difficult year for the dairy industry, to say the least. Dairy farmers here in Yorkshire and right across the UK are struggling and it’s not getting any easier. The market outlook for the rest of this year and into 2016 is not positive so we’re in for an extremely difficult autumn and winter. The story of increasing volatility and falling prices has become all too familiar.
In the past couple of weeks farmers have been dealt another blow with the announcement of yet more price cuts from dairy giant Arla, with more cuts expected in the coming weeks and months. To give you an idea of how these cuts affect us, every time a penny is taken off the price of a litre of milk an average size family dairy farm with 130 cows producing around a million litres a year would see its income go down by down by £10,000. Most farmers have had 10 pence per litre wiped off the price over the past 12 months, so that’s actually a cut of £100,000.
And according to industry body AHDB Dairy, the cost of producing a litre of milk ranges from 26.5 to 36 pence per litre, depending on the particular circumstances of the farm, so you can see why farmers are experiencing such hardship in this untenable situation. It’s not surprising that in the past year alone 450 dairy farmers in England and Wales have left the industry and we could see another 2,000 exit later this year.
The problems we currently face are clear enough, but what are the solutions? Clearly there is an urgent need for meaningful change to bring long-term sustainability, and hopefully, prosperity to the industry.
Ultimately what we need to see is farmers being paid a sustainable price for their milk, and given the increased global demand for dairy products we are hopeful that will eventually happen.
But if you are struggling with your businesses today, that long-term aspiration won’t cut much ice when you’re trying to negotiate a bigger overdraft.
Many of our dairy farmer members are feeling completely helpless, being driven to breaking point, haemorrhaging money, and leaving the industry in their droves. Over the past few weeks we have seen farmers start taking some direct action here. These farmers are at the end of their tether – they’re scared that they could lose their jobs, their homes and their way of life.
I’ve spoken to hundreds of dairy farmers recently who are questioning their future in the industry. Their clear message is that we must remain united. Of course, there is no magic lever to pull that will make it all better. However, that doesn’t mean we should stop trying as organisations and as individuals. This is why the NFU is working with Farmers For Action, the Tenant Farmers Association and others to help signpost help for the short term and find agreed solutions for the long term.
I have met with the Farming Minister George Eustice to again reiterate just how bad it is at the moment and the potential fallout. We desperately need the Government’s help to ensure a fully functioning and fair dairy supply chain. We want to help develop innovative new tools that help balance the price risk between farmer, processor and end user, which will build more transparency and trust into the UK dairy sector.
The UK’s dairy sector is not self-sufficient, which should provide some insulation from market volatility, but retailers are currently selling milk at ridiculously low prices. We need them to provide transparency and take some responsibility for their actions by proving they aren’t taking farmers’ money to fund these discounts.
The public continue to support us, which is fantastic. Some recent research from Mintel has shown that shoppers would value nutrient enhanced milk and will pay more for the milk they buy. NFU survey work has shown that 85 per cent of people want to see retailers selling more British food. All we ask is that you continue to buy British dairy products, including yogurt, butter and cheese – we produce a wide variety of British dairy products in the UK including world-recognised local cheeses. Look out for the Red Tractor logo and continue to back British dairy farming.
We all want to be part of a growing successful dairy industry, but the next 12 months is going to be incredibly tough. We urge farmers to face up to those difficult decisions and not wait in hope for things to improve.
Rob Harrison is national chairman of the NFU dairy board.