UK dairy industry in crisis

19 Jan, 2015 09:19 AM
This industry has seen dairy farmers go from princes to paupers in 18 months and it can not continue

THE British milk industry is in crisis with the National Farmers Union (NFU) warning the number of dairy farmers in England and Wales could halve to less than 5000 within 10 years.

It says some UK farmers are now receiving just 20 pence per litre (A37 cents), yet farm costs are 36 per cent higher than they were eight years ago and the cost of animal feed has doubled since 2007.

"This combination has left many producers under extreme financial pressure and fearing for the future of their dairy businesses," NFU president Meurig Raymond said.

Last month 60 dairy farmers left the industry and the NFU's dairy board chairman, Rob Harrison, said he and his colleagues were "completely appalled" by the ongoing price cuts which were crippling the industry.

Mr Raymond said while the global downturn in milk prices couldn't be reversed, the NFU would continue its difficult discussions with processors and retailers to ensure the UK had a economically sustainable dairy industry.

Milk is now cheaper than bottled water and the squeeze on margins has led the UK's largest dairy company, First Milk, a Glasgow based co-op, to withhold payments to its farmers for a fortnight.

"We don't know how long this current market downturn will last and we are aware that hundreds of UK dairy farmers are unlikely to find a home for their milk this (northern hemisphere) spring," its chairman, Sir Jim Paice, said.

The NFU said returns from globally traded dairy products had fallen by more than 50pc in the past 12 months, leading to a steep drop in milk prices around the world.

Mr Raymond said a fierce supermarket price war in Britain had contributed to a steep decline in dairy farmer numbers with 60 leaving the industry in December alone.

David Handley, leader of the militant lobby Farmers for Action (FFA), has threatened to quit dairying if prices remained at current levels.

In a speech in Glasgow earlier this month Mr Handley attacked everyone from processors and retailers to the British Government for the industry's plight.

"If anybody thinks I am going to run a business and be hammered on price then they have another thing coming. I will get out if things do not change," he said.

"This industry has seen dairy farmers go from princes to paupers in 18 months and it can not continue."

He said retailers could immediately inject cash into the chain by bumping up their shelf prices.

Meanwhile, Mr Raymond said farmers were facing their lowest milk price in eight years and his family farm in Wales, which has about 620 cows, had seen $460,000 slashed from the milk cheque due to the cuts.

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20/01/2015 8:45:50 AM

"milk is cheaper than bottled water" and why is this? because everyone takes advantage of the dairyfarmer. why is water so expensive? because clever marketing and price fixing between major beverage companies keeps water at a constant price. why should milk be any different? because the peak dairy group have no balls and no brains to market a very good product properly. why dont they employ an ex coke or pepsi guru to shore up sales? smart people with outcome based pay cheques will get good outcomes for everyone. the way it stands now the farmer just cops all the margin loss. australia's same
20/01/2015 7:04:42 PM

The world of supermarkets adopt simple strategies, one of which is use staples as loss leaders and place them to get people to move across the store going past stuff that is bought on impulse. This is a power game which customers may cry about but are happy to benefit from. How do dairy farmers get power? Governments balance the equation or? Australian supermarkets are happily eyeing dairy products coming from NZ. This is the market at work; power rules. This is the market at work; power rules. Strategic capacity to supply during adversity – dead concept.
21/01/2015 6:17:27 AM

There is too much milk and they need to cut output but with quotas ending they are preparing to produce more. How come the Irish are not complaining as much as the poms?
Jock Munro
21/01/2015 8:47:35 AM

Cronus-an outstanding contribution. The Kiwis have used legislative and co operative principles to provide market equity to their dairy farmers and they are on top of the world.
Cattle Advocate
21/01/2015 6:07:30 PM

1 estimate, the $1/lt milk war will cost Aus dairy about $2.8B by Aus day 2015 while NZ dairy banked their profits. During the $1/lt war smaller retailers had short supply while an major oversupplied retailer dumped it on the Aus market at 75c/lt similar to the UK. Is there an exit trategy for the 1/lt war or is that someone else's problem where UHT comes to the rescue?


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