29 September 2000

Advice by pailful on future of milk

THERE was plenty of advice at the European Dairy Farming Event for producers pondering their future in milk.

The recent ABN survey of milk producers was a talking point, with particular concern about the number of tenant farmers likely to leave the industry.

According to Tenant Farmers Association chief executive George Dunn about half of dairy farms are tenanted, but current conditions mean that tenant numbers are likely to continue falling.

"There is a crisis in all sectors, and it has hit tenants badly, but the ability to share risk with the landowner is still a significant advantage.

"In many cases, banks are keener to get owner-occupiers to sell as tenants have no obvious means to repay them, so tenants can perversely be better off because of that. But there is increasing pressure and I wouldnt be surprised if more people disappeared from the dairy industry."

A key problem for tenants is that there is little opportunity to diversify to help improve profitability, said Mr Dunn. "While owner-occupiers can develop bed and breakfast businesses, enter environmental schemes or sell land, tenants have to approach their landlord before they can make any change. For some, this limits their options."

He added that the TFA is still pushing government for a retirement scheme for tenants.

But where producers decide to stay in the industry, the ABN survey suggested that more than half of farms with more than 200 cows will expand, while 15% and 10% of herds with fewer than 49 cows and 50-99 cows, respectively will quit.

While this suggests that many producers are changing their businesses, Salisbury-based Strutt and Parker consultant Andrew Graham was quick to point out that change wasnt necessary for changes sake.

"The survey provides some good information, but shouldnt make anyone feel they have to change. While no-one can afford to sit back, if you are making profit, arent eroding your capital base by carrying on and are happy with your business than carry on as you are."