Act early to protect against uncollected milk

Last year’s hard winter caused major problems for tankers accessing farms and led to hundreds of farmers having to dispose of milk when tanks became full.

Some farmers were able to use emergency tanks to store their milk, but most of these were not up to the food safety standards required by processors and milk still had to be disposed of, says Peter Dawson, policy director at processor body Dairy UK.

“In a few cases a dairy provided high-specification emergency tanks that were able to store the surplus milk until a tanker was able to arrive, but this was rare.”

Mr Dawson urges producers considering using an emergency tank to contact their milk buyers well before they need to do so to ensure it meets the required standards.

“Farmers who are thinking of installing or purchasing an emergency tank should use the next few months in the run-up to winter to make sure specifications are adequate. That will include refrigeration specifications, location of tank and the connection to milking equipment.”

If installing or using an emergency tank is not feasible then Mr Dawson says farmers should double-check their farm insurance policy to make sure it covers them for uncollected milk in the event of an emergency.

“The peace of mind that the small investment in cover brings makes very sound business sense.”

David Cotton, chairman of the Royal Association of British Dairy Farmers, agrees: “With milk prices at around 25p/litre, losing the value of a 3000 litre tank of milk is £750. If the winter is another long and hard one then losses could be substantially greater than that.”

Some farms will be at greater risk than others from disruption to milk collection, he says. “If you are in a higher [altitude] area, where there is a greater risk of snow or you have a difficult-to-negotiate drive, then cover is very advisable.”

Mr Cotton says dairy farmers should ensure they have collection cover against weather events such as flooding, as well as general tank cover for events such as a breakdown or system failure.

NFU Mutual estimates that only about one-quarter of UK dairy farmers have protection against uncollected milk. It will provide cover for the value of milk that cannot be collected by a dairy due to circumstances outside the farm’s control, including snowed-in roads.

Cover operates for each individual weather event so, if snow prevents tanker access for a number of days, this will be considered as a single event and losses up to the sum insured during that time will be repaid. NFU Mutual quotes a range of between £300 and £400 for every £10,000 insured for uncollected milk. That covers tank failure as well as missed collection due to events such as snow.

Alan Goddard of Cornish Mutual says the insurer had a to pay a number of claims in the south west last winter and there was a particular issue where tanker drivers were not prepared to attempt to come onto the farm.

“In some cases drivers themselves are liable for any losses so they want to avoid that risk,” he says.

He urges farmers to ask for uncollected milk cover well in advance of a possible event or claim. “Uncollected milk cover will often be part of the general insurance policy which we will discuss with members when they are renewing. Farmers cannot expected to get cover the day before they think they might need it.”

Farmers needing to dispose of surplus milk need to take precautions to avoid pollution. The Environment Agency normally forbids milk to be spread on frozen ground, but in exceptional circumstances it will allow spreading provided:

• Action has been taken to prevent storage overflowing

• There is no alternative temporary storage available – including at a neighbour’s farm – and there are no other environmentally acceptable options for disposal

• The activity is unlikely to result in pollution

Want to find out more about the standards required for temporary tanks or milk insurance? Companies from all sectors of the dairy supply chain will be at this year’s Dairy Event and Livestock Show at the NEC, Birmingham, on 7 and 8 September. More information on our DELS 2010 page