5 March 1999

Protect and cash in on consumers perception

CONSUMER perception of dairy farming is favourable, and that is an asset which producers should protect and capitalise upon.

But Martin Potter of the RSPCA also warned conference delegates that the public was questioning food production methods more and producers would be under increasing scrutiny. Surveys had shown that although welfare is still low on the list of customer priorities it was increasing in importance each year.

Consumers were faced with a vast choice of products with up to 40,000 products offered in larger supermarkets. At the same time, their contact with farmers had reduced.

He believed the RSPCA Freedom Foods farm assurance scheme – based entirely on animal welfare – could offer an asset with a trusted name. It is also achievable by most dairy producers.

"There are benefits to the producer. Quality assurance can help secure a market for the future and maintain consumer confidence.

"Increasing public interest means more consumers are willing to buy welfare friendly produce when available. Price is a barrier, and although consumers want added assurance, they are not prepared to pay much more for it." Generally, they want to pay less than a 10% premium for assurance, said Dr Potter.

"There are few alternatives to dairy products, so the public has a desire to believe they are wholesome. This means even vegetarians dont believe dairy cow welfare is a major issue.

"Consumers believe that cows are in fields, therefore free-range, and that equals good welfare." But one high-profile milk scare could easily change that, he warned.

Freedom Foods standards are based around the five freedoms, Farm Animal Welfare Council recommendations, MAFF codes of practice and advisory booklets.

These standards were difficult to put together because of the variety of systems used. Currently, 270 dairy farms are recognised as achieving its standard.

A recent advertising campaign promoting Freedom Foods products had been successful in one television region and the RSPCA was committed to a national campaign this year, he added. Freedom Foods accredited dairy products are only stocked by Somerfield and Tesco at present.

How can dairy producers secure future success? Good

welfare, ensuring profit and marketing will help. Jessica Buss

and Emma Penny report from the Royal Association of

British Dairy Farmers conference at Great Malvern, Worcs

Assurance can help secure a market for the future and maintain consumer confidence, says Martin Potter.

MILKSIMAGE

&#8226 Currently favourable.

&#8226 Under increasing scrutiny.

&#8226 QA will reassure consumer.

EVENT BRIEFS

uPRODUCERS and retailers needed to come to a better understanding, said Malcolm Stansfield of Reading University. "Some at the retail end are discounting products too much and producers are suffering. We need to communicate and share profits equally.

uAUTOMATED milking is a welfare friendly option for family farms. Ole Lind of Alfa-Laval said it had potential to lift milk yield, quality and improve udder health. It also meant producers were less tied to routine. Cows milked by robots are calm and enter the milking station voluntarily. He estimated that there would be 2500 robotic milkers in Europe by 2002. There are about 300 in use now.

uGENUS is hunting for a third division which is less exposed to agriculture and government fluctuation to add to its portfolio before floating on the stock market. Chief executive, Richard Wood, said its breeding program would also be increasingly productive.

Forage may have edge on straw in late dry period

FEEDING high quality forage in the late dry period could be more beneficial than offering straw.

Delivering the British Society of Animal Science lecture at the conference, IGER Aberystwyth researcher Richard Dewhurst said the effect of poor rations may be seen in two weeks time, or even three months, so correct feeding during the dry period was vital.

"In the late dry period, provide good forage with high intake potential. Many believe feeding straw before calving will stretch the rumen and condition the papillae and microbes, but research shows there is not much evidence of either.

"Forage intake before calving is related to intake post-delivery. Feeding straw will reduce intakes and milk production until five or six weeks after calving. It is more important for cows to be used to a high throughout of good forage in the late dry period," he said.

"Using concentrates to bolster intakes is very much second best, although they may be a reliable route for ensuring cows receive enough minerals. We have just finished a trial which seems to suggest that high quality, high digestibility silage is the best option. We are considering looking at the effect of feeding legume silages next."

Offering a protein supplement could help replenish body protein and increase milk production in some cows, but could stimulate forage intake, allowing cows to become over-fat. "Our trials suggest that body protein reserves change in response to feeding, but probably do not cause differences in milk production or composition."

Better management of dry cows would pay, said Dr Dewhurst. "Besides helping to avoid low milk proteins, most cow health problems occur round the dry period or as a result of management during it. More attention to nutrition could help reduce concerns."

MMD says it certainly pays to advertise

ABOUT £1.5bn will be spent marketing food in the UK this year and the dairy sector must maintain a presence in this market.

That was the message from Bryan Finn of MMD, who completed a report on generic milk advertising last year.

He told delegates that more than £60m would be spent on advertising soft drinks this year. That was 5% of the consumer spend on that sector compared with just 0.1% for milk. Yogurt and cheese fared better at 2% and 1.5%, respectively, of consumer spend spent on marketing.

He believed that generic advertising of liquid milk offered the best potential return on investment. A spend of £10m, half funded by producers and half by processors, could return £29m, he estimated.

That could help arrest the fall in milk sales, which had accelerated since advertising was reduced in 1992 and was reflected in the decline of doorstep deliveries. "When customers move from doorstep to supermarket milk, every pint they once bought is reduced to three-quarters of a pint.

"The job of generic advertising is to enhance the product and look forward to the longer term. When you do not advertise over a long period consumer perceptions can change and that will have serious consequences."

He warned that generic advertising of liquid milk would not mean more milk would be sold. But it would reduce manufactured milk sales, causing a small increase in price.

"How much producers would benefit is difficult to study because they are a long way from the consumer," he said.

He suggested a possible increase in milk price of 0.24p/litre if generic advertising was to be introduced. Although there was a risk the benefit would not reach the producer, the rewards could be significant.

Rewards from generic milk advertising could be significant, says Bryan Finn.

Reinvestment calls for much improved targeting of capital

AFTER taking assets out of the business by closing one dairy herd, Cheshire producer Andrew Chadwick admits reinvesting would require making far better use of capital than at present.

"British dairy farmers – ourselves included – use capital very inefficiently. Any reinvestment we might make would have to address this aspect thoroughly. We also expect the future to be tougher; a change of culture and a willingness to embrace radical solutions will be required," he told the conference.

The 330-cow Kynarton herd run by the Chadwicks at Bretton Hall Farm, Chester, yields an average of 10,000 litres, with calves currently averaging £PIN 100 or more. "We are dealing with different animals today, and a different economic situation."

The desire to make the most of high genetic merit stock and capital had meant a push for yield, he said.

"There is an economic case for higher yields and feeding for that, A cow yielding 10,000 litres requires 0.3ha, while two 5000-litre cows need 0.9ha. The capital cost of lower yielding animals is three times as much. Land is not cheap, and neither is forage – grass silage is now more expensive than wheat."

Mr Chadwick told the audience that while concentrate costs increased with higher yields, forage costs fell. "But margin over total feed doubles at 10,000 litres. There are costs associated with higher yields. We reckoned we needed an extra 2500 litres to pay for the diet feeder and extra labour, particularly with three-times-a day milking, but that increase can be achieved quickly and efficiently."

Managing these cows depended on building skilled, motivated, properly rewarded teams.

"On-farm, people are the most important but under-rated part of the business. We must spend to build teams and expertise. Producers need training on how to manage staff rather than cow nutrition and genetics," stressed Mr Chadwick.

Making the most of high genetic merit stock and capital invested in the business has meant a push for yield, explains Andrew Chadwick.

Chadwick performance

Yield a cow

(litres)

5,000 10,000

Milk @ 20p/litre (£) 1,000 2,000

Concentrates

@ £110/t 83 436

MOC (£/cow) 917 1564

MOC (p/litre) 18.3 15.6

Forage costs

@ £70/t DM

(£ a cow) 266 210

Quota @18p/litre

(£ a cow) 400 800

MOTF and quota

(£ a cow) 251 554

MOTF and quota

(p/litre) 5.0 5.5

Low-cost threat to UK

COUNTRIES producing commodities such as milk at low cost will be a threat to UK producers over the next 20 years.

Joe Phelan of the Food and Agriculture Organisation said there would still be undernourished people in the world in 20 years. But closer to home, population growth will be small and only 6% of milk and meat is traded internationally. So opportunities for increasing UK production are limited.

"The EU will lose market share after the World Trade Organisation reforms and the US may increase exports: Countries producing at low cost will increase their share, because they can produce milk at less than 12p/litre," he added.

"But that milk will not all come from Australia and New Zealand." Argentina, Uruguay and possibly Chile also have potential. He believed that for a short period Poland and the Czech Republic would also increase world market share, but that may be short-lived.

He believed the UK should extract maximum benefit from EU markets and make the most of short-term allowances.

End technical obsession

MILK producers obsession with technical focus must stop, because survival is about making money.

But Tom Kelly, Axient director, said cutting costs was harder to talk about than maximising milk price or increasing production.

"There is little point in trying to do something cheaply when it should not be done at all. It is easier to solve a business problem by increasing output than cutting costs, and it is easier to talk about."

Despite a tremendous range in profits between the top and bottom 25% in Axient costed farms, the top quartile have higher output and lower costs, so potential for further economising is limited.

"It is not impossible for these farms to save costs but it is difficult in many cases, so increasing output can lower costs a cow." &#42