DAIRY FARMERS can expect an extended depression in the UK market, with an average forecast that milk prices will rise by just 2p per litre over the next year, according to a new analysis by accountants.
The alarm has been sounded as leading farming figures yesterday held a crisis summit which was also due to be attended by the Prince of Wales, at Chatsworth, and which aimed to identify immediate actions that are needed to avert a worsening cashflow climate in farming over the winter.
With farm gate dairy prices down on average to 23.2ppl in August, compared to 31.03ppl at the same time a year earlier, dairy farmers are entering the winter period in an even more precarious position than before.
One-off dairy farmer support payments, agreed at EU level, will be made in December to the tune, on average, of around £1,800 per dairy farmer - roughly at the same time as Basic Payment Scheme payments start to be paid by the Rural Payments Agency.
But any relief could be short-lived, according to the results of a survey by farm accountants Old Mill.
It found that 24 per cent of its clients expect their average farm gate milk price to increase from its current six-year low of about 24ppl to 26ppl this time next year. About 36 per cent expect it to remain between 23p and 25ppl, with 40 per cent predicting an increase to 27-29ppl.
Mike Butler, chairman of the Old Mill board, said: “In a way it is a sign of optimism that only two per cent of farmers expected prices to drop further. There is clearly a feeling that we have reached the bottom, and the mood at the Dairy Show (where the survey was conducted) was surprisingly upbeat, with a tremendous attendance despite the current downturn.
“However, with no sign of an immediate improvement in prices dairy farmers are understandably extremely concerned about their future in the industry,
“Quite frankly many dairy farmers have simply had enough and processors and retailers should consider how profitable and efficient their own businesses will be when they can only find milk to fulfil 80 per cent of their processing capacity. The industry is on its knees and another 12 months at current levels will simply be too much to bear.”
National Farmers’ Union members recently met Farming Minister George Eustice to press the Government for more support.
In a blog post detailing how the meeting went, Sian Davies, the union’s chief dairy adviser, said: “When we met with George Eustice, I called for a number of short-term measures, including prompt payment of BPS monies, giving farmers who’re losing money more time to pay tax which is due in January, plus bringing in the five year tax averaging that was announced earlier this year.
“I also believe government has a role in urging allied industries and the banks to be supportive and understanding of the current market downturn. They can also make a difference when it comes to clearer labelling and I’m glad to see movement in strengthening the UK voluntary code on labelling across all sectors.”
DAIRIES SALE A GOOD SIGN
The sale of Dairy Crest Dairies to Muller UK & Ireland will be completed in December, following approval by the Competition and Markets Authority.
The CMA has announced it has accepted modified undertakings provided by Müller and has approved the move.
Rob Harrison, the NFU’s dairy board chairman, said: “The NFU is fully supportive of the cost efficiencies that this acquisition is expected to generate and we consider it to be a positive step in building an increasingly sustainable dairy sector.
“We urge Müller to recognise and work constructively with the producer organisation Dairy Crest Direct, which will stay in place.”