Rising milk prices may have slowed the rate at which people are leaving the dairy sector, but it is likely to be just a temporary respite for those who fail to address the challenges that lie ahead.
“A year ago the dairy sector was losing three farmers a day,” says NFU board chairman and Farmers Weekly Dairy Farmer of the Year judge Gwyn Jones. “Now that is down to about two a day. But that is still a significant number.”
Mr Jones, who milks 750 cows on 1000 acres Crouchlands Farm near Billingshurt in West Sussex, is quite optimistic about price prospects for the rest of the year.
“Even though Continental values are falling, in the UK prices are continuing to rise, most recently with Tesco’s 0.5p/litre increase. It comes down to supply and demand, and milk availability is really tight. Buyers dare not risk dropping price or supply will dry up even more.”
The UK is less dependent on commodities than some other member states and the logistics of cross-Channel haulage provide some protection from imports. “The weak pound is also helping us enormously, as is the late, cold spring,” he says.
But Mr Jones warns that there are some real challenges on the horizon and margins will still be squeezed this year.
Rising feed and fuel costs and bluetongue are the obvious ones. But labour is also a major factor. “It’s just not possible to get British workers. We currently have six foreign employees – three Ukrainians and three Phillipinos,” he says. “They are not any cheaper. They still have to have housing and transport.”
But the greatest challenge, says Mr Jones, is the imminent introduction of the new Nitrates Action Programme.
The NFU puts the average cost of investment at about £50,000 to £60,000 a farm to meet the new conditions. “If farmers are not given enough time to comply, this will hasten the demise of the dairy sector.”
Keys to survival
Faced with these challenges, what are the keys to survival? Mr Jones has a list of tips.
“First, you must maintain tight managerial control – know your costs and benchmark your farm against your fellow farmers.
“Second, focus on the bottom line. Do not get distracted by things like yield/cow or margin/acre. They don’t mean much. It’s end of year profit that counts.
“Third, try and do a good job of everything rather than an exceptional job of just one or two things.
“Fourth, herd health is key – I know from experience. We now work with the vet to manage herd health, rather than calling him in for fire-fighting.
“Fifth, staff management is crucial. We have written protocols for everything. But we also provide incentives for our staff.”
But Mr Jones’s top tip is to renegotiate the milk contract. “We have a once in a lifetime opportunity to change the terms of our contracts so that our buyers do not tell us what price we are getting, but any change is negotiated between both parties.”
These keys to survival are among the attributes Mr Jones and his fellow judges will be looking for in the finalists for this year’s Farmers Weekly Dairy Farmer of the Year award.
In addition, he will be looking for farmers who are to meet the challenges, are engaging with their communities and are demonstrating some form of leadership.
Enter the awards
Do you deserve an award for the way you run your dairy farm, or do you know someone who does? The closing date for entries for this year’s Farmers Weekly Dairy Farmer of the Year Award is just two weeks away on 30 April. We are still keen to get more entries. So why not download a form from the website or call Marion Phillips on 0208 652 4081. Being an award winner can help in your business and is a great recognition for a job well done.