David Handley on hopes and fears for the future of dairy farming

Farmers For Action’s leader David Handley is selling off his cows as he prepares to quit dairying. In this question and answer session with Farmers Weekly he explains why the dairy industry is set to face even tougher times in 2016.

The campaign group leader argues that further protests over milk prices in the run up to Christmas could well be justified and considers the success of A-B milk contracts.

Plus, Mr Handley explains why he questions how much value for money levy organisation such as AHDB Dairy offers famers and addresses the creation of breakaway group Farmers For Real Action.

You said you were going to exit dairying in the spring. Why then are you still milking cows?

We have gone down from 140 milking cows to 60 and the remainder are in a drying-off period and will be sold by spring, unless there is a miraculous turnaround in the milk price. All the youngstock are gone.

We can’t sustain producing milk on this farm at current prices.

See also: Dairy farmers target major food firms in milk price fight

At the Oxford Farming Conference this year, farmers were told the situation in the dairy industry would improve. Why is there no sign of any real uplift?

Farmers For Action (FFA) follows the markets globally and every indicator from as far afield as China was telling us loud and clear there was going to be no upturn in 2015 and very unlikely that there would be one in 2016.

You have to question why farmers were being told this.

They have proven to be wrong and I am waiting to see somebody from the NFU come up and tell its members and the farming community in general: “We’re sorry, we got it wrong.”

Do you believe the least efficient dairy producers should exit the industry now or sit tight?

I don’t like the word “efficient”. In my view, in their own right, everybody thinks they are efficient.

My view is those people who are producing milk but not covering their production costs and are looking to borrow more to stand still and wait for normality, should be looking at their businesses and questioning whether an exit strategy should be put in place.

“I am afraid there will be a number of people reading this who I don’t think will be milking cows by the time we reach the 2016-17 milk year through no fault of their own”
David Handley, Farmers For Action

Do AHDB and AHDB Dairy offer levy payers good value for money?

In my view, AHDB in general and AHDB Dairy are not fit for purpose. My challenge to AHDB Dairy, to the MPs and the government that have a jurisdiction over that body, is it should be made to stand up like a commercial body, like any other consultancy.

And if it’s successful and makes a profit, then it should stay. But it should not be a burden on the taxpayer/farmer – and that’s how I see it at the moment.

Would dairy protests against retailers and processors in the run-up to Christmas be justified?

I definitely think they would. I think since 2012 and SOS Dairy and through the recent campaign and the forming of the coalition, there is money within the UK domestic market that is not finding its way down the supply chain to put a sustainable price for British dairy farmers.

Surely, it cannot be a good policy to blockade customers’ premises?

I have said from day one within FFA the way forward is always dialogue first.

Try to understand where your processor or your retailer is coming from.

Then go away and try again.

If that fails, then, if you have the full support of your membership, blockading and protesting are fully justified. But you must exhaust every other avenue before that happens.

Why are you so critical of the NFU? After all, they say they will back milk protests with “clear objectives”?

The NFU are very good at communicating through a communications network about those things they do that bring rewards to farmers.

In dairy, I don’t believe that is the case. As for protests, every single protest is fully justified if talks fail.

After constant talking, if our members want something done, I think the NFU should do the same.

What angers me most about the NFU is they do not give their members an option.

When you are a membership organisation, you should be listening to your membership.

You were protesting in the summer with supermarket trolley dashes and the situation is worse than ever. Surely the NFU has a point?

No, I totally disagree. The situation is not worse than ever from the protest point of view.

We have delivered money back, directly from Morrisons, Tesco, Co-op, Asda, Lidl and Aldi.

We’ve had supplementary payments as much as £1.6p/litre by some processors. To me, that’s success.

Where it is starting to fail now, is that the NFU have decided that they think it’s enough and they want to back off. But this is when we should be piling the pressure on everybody.

What do you think about the decision by some farmers to break away from FFA and form the United Farmers for Real Action?

I was disappointed when it first happened.

“We have got farmers losing money and increasing yields when there is no market for that product”
David Handley, Farmers For Action

But I can understand why they did it. It is no different than 15 years ago when FFA came up against the NFU. It’s frustration and anger that drives someone to do this.

They feel as though they are being let down by all the organisations.

Do you think there is too much milk produced in the UK? If so, what should farmers do to get supply and demand back to appropriate levels?

Both globally and in the UK, we are not working as a dairy supply chain.

We have got farmers losing money and increasing yields when there is no market for that product.

That is absolute madness. Every time an extra litre gets put on, where there is no market for it, it dilutes any money that the farmer representation is able to extract from the market. How do we control it?

Well, FFA put forward a very good plan for that in the form of A-B pricing. We put it to the industry. The establishment,

DairyCo, the NFU and others, did not take that up and debate it.

Since then, a number of dairy processors have taken up A-B and used it to suit their business to do what FFA desired, which was a way of controlling volume, with market demand.

Surveys show nine out of 10 shoppers would pay more for milk. Why will retailers not just raise milk prices and pay farmers the extra?

It’s very simple. The retailers use our product as a way of getting footfall through their stores. I think in 2015 that is immoral.

I think the general public would pay more.

But do we expect people to pay more when we see margins on products at some 40% above what they are paying a dairy farmer for his milk, or a pig farmer for his pork or a sheep farmer for his lamb?

If some of that money within that supply chain came down and was spread evenly to the amount of effort that is put in at each point, I don’t think we’d be asking the consumer to pay more money.

What do you think the future holds for dairy in 2016 and beyond?

I think 2016 is going to be very difficult.

I am afraid there will be a number of people reading this who I don’t think will be milking cows by the time we reach the 2016-17 milk year through no fault of their own.

It’s a supply chain issue. It’s a fact of life. There is a great future for dairy in the medium to long term.

In the UK, we produce some of the best milk in the world.

We’ve got some of the best genetics and farmers. I would like to see a successful co-operative working in the UK and I think farmers have got to use producer organisations.

That would enable us to reduce some of the volatility and provide the next generation with a more stable milk price.

Is there a future for a 100-cow dairy farm in the UK?

Yes. There is a place in the UK dairy market for a person who has 60 cows.

If a person has the ability to produce milk at the price his processor is willing to pay for that milk, then he has every right to produce that milk.

If he cannot produce it to the milk price being paid, then I would question whether that business is viable.

I see as many 100-cow operations with fantastic yields, breeding and managing as I do 1,500-cow units.

If we say the only people who are viable are those with 1,500 cows and above, how are we ever going to get young farmers into the dairy industry?

We will stagnate the industry and will be importing more and more product, which is not good for GDP in this country.

Who is not going to be on your Christmas card list this year?

Anyone who is in the supply chain and is not paying a price that enables farmers to cover the cost of production. You are on the agenda in the run-up to Christmas.