By Farmers Weekly staff
“IT is impossible to forecast milk prices.”
That statement, ironically delivered at a recent meeting entitled Milk Price 2000 Onwards by Exeter University economist Martin Turner, reflects the harsh realities of the fast-changing market.
The biggest problem facing dairy farmers was their milk marketing arrangements.
These were a “complete and utter mess” after the fiasco of the break-up of Milk Marque and left producers in an extremely weak position, he told farmers attending an MDC/Duchy College meeting in Devon.
“In a sense they (processors) have won. But you both need each other.
“So the productive way forward is to be positive about the future and work with them to forge closer links.”
Even that had weaknesses, he admitted, because it was widely felt that the UK processing sector was not all that efficient, a result of many years in a managed market.
“They need to be more proactive in developing markets,” said Mr Turner.
Unless the Euro strengthened significantly against sterling any improvement in milk price this year was unlikely, he added.
Further ahead, world trends suggested growth in both production and demand.
Future success would depend on close links with consumers, preferably direct rather than via retailers, allowing anticipation of changing demands.
Farm businesses would also have to be structured to withstand abrupt changes in profitability.
Borrowings would have to be reduced and management tightened to allow constant checks on the business, rather than waiting until year-end accounts.
Accurate costs of production must be available and the constant goal must be best practice in both financial and technical fields.
Cost control was vital – and possible, as shown by work being done with farmer groups and the Duchy College in Cornwall.
Supermarket promises of cheaper organic foods would probably be delivered, Mr Turner warned delegates.
But there would always have to be a premium to cover the inevitable extra production costs, or the supply would dry up, said Mr Turner.