8 January 1999

Milk profit is the key factor

WHEN milk splashed into the bulk tank in July 1997 it was the first that Cheshire dairy farmer Ken Oliver had produced for over two years.

But being temporarily "on the sidelines" did not lessen the impact of the farming crisis – in fact it made him even more aware of pressures faced by milk producers.

He is tenant of the 109ha (270-acre) Shannock Farm, Somerford Booths, near Congleton. There are 78 milking cows and 120 followers with the intention of building up to 120 milk cows by early spring. Mr Oliver runs the farm single-handed with occasional help from relief staff and his son Mark, who is studying at Reaseheath College.

A big change in farm policy was made in 1994 when the decision was taken to sell-off the existing flying herd, lease-out the quota and build the herd again based on bought-in registered calves. A large part of the farm was turned over to cereals; 28.3ha (70 acres) are still grown for home use.

Health problems delayed the intended return to milk production in summer 1996, which led to 50 newly calved heifers being sold at the height of the BSE crisis.

"We ended up almost giving them away. Although we had been out of the stock selling market for two years even we could not escape the impact of the panic that had set in.

"And having been in the position to lease-out quota in the short term made me question the level of return. It is only when you are on the opposite side of the deal and want to lease-in quota that you start to see the whole picture," says Mr Oliver.

But, despite having generated a farm income from outside the milking parlour along with a return from quota leasing, he did not falter in his determination to return to milk production.

Now, 18 months after being re-established, the herd is heading for an average yield of 6800-7000 litres. And there have been management changes to improve efficiency.

"We have switched to a total mixed ration and have ditched the feeders. There is nothing to be gained from feeding cows in the parlour except a bigger feed bill."

Maize and fodder beet acres used to grow feed for the total diet mix have given the farm the benefit of IACS payments. They may have brought much needed income, but profitable milk production remains the key to success.

Mr Oliver, who takes over as county chairman of Cheshire NFU this month, believes future returns for milk producers are inextricably linked to the currency situation.

"The value of the £ which has dropped significantly against the Deutchmark in recent months, has, hopefully, produced a bottoming-out of the milk price slump that we have been faced with.

"This winter has created a one-off situation where, because of the poor grass and silage quality following the awful summer, wholesalers are chasing milk supplies. But that is unlikely to be sustained."

This situation is leading to some tempting premiums being offered by certain north-west milk buyers. An extra 5p/litre has been promised to producers who can increase their output by 10% between November and the end of the milk year.

"I am fairly confident that we will not see the milk price fall further during 1999, and we might, hopefully, see an improvement. Milk price is still the biggest pressure on dairy farmers.

"We have been facing a crisis just like other livestock sectors – and our cull cow prices have added to the problem. The aid package will not benefit us except that the calf processing scheme has been extended."

Although dairy farming remains under pressure, Mr Oliver believes that it may have turned the corner.

"I think we could be the first livestock sector to have seen a chink of light at the end of the tunnel. Dairy farmers have acted swiftly to a changing situation. More emphasis is being placed on milk from grass, everyone is trying to produce milk more efficiently and inputs are being reduced in line with the end price we can earn from the market."

Mr Oliver sets out the New Year message he would like the industrys decision makers to heed.

"I would like to see a single quality assurance scheme in operation to cover all dairy farms and to be overseen by a single organisation that would apply one set of standards. Those standards would apply to an entire farm and cover all its enterprises – stock and crops.

"And I would like to see cull cows born after August 1996 to be eligible for entry into the food chain. Numbers would not be great, but these cows have the required passports and could start giving back some cull cow value to dairy farmers."

Could dairy farmers be the first to recover from last years dip in fortunes? Cheshire dairy farmer Ken Oliver believes that might be so.