Dairy Event 2010: Farmers battling rising input costs, says RABDF

Dairy farmers are continuing to play catch up when it comes milk prices, with input prices once again outstripping farm incomes for many producers.

Speaking at the Royal Association of British Dairy Farmers briefing at this year’s Dairy Event and Livestock Show, RABDF chairman David Cotton said feed and fertiliser prices were set to add another 2p a litre to production costs this winter, with many farmers facing reduced fodder reserves too which would further impact on costs.

“Global commodity prices are also extremely volatile, with New Zealand Processor Fonterra’s auction prices in freefall over the last four months, with a cumulative 20% drop in prices amid expectations of rising global supplies and an uncertain economic outlook.”

These factors, coupled with a continuing over capacity in the UK processing sector led Mr Cotton to make calls for further consolidation within the sector.

“As few as 15% of British dairy farmers have an opportunity to sign up to a dedicated retail liquid contract, leaving the remaining 85% to struggle with the vagaries of the market place. Those farming in remoter areas are likely to have a maximum of two milk buyers to choose from, limiting their opportunity to exploit a contract.”

Smaller manufacturers should merge with others or sell their businesses, said Mr Cotton. “A number of cheese plants are running well below capacity, partly as a result of lost contracts and also because they are making niche, territorial cheeses.”

Meanwhile, despite no new cases of bluetongue in the UK or many other EU countries this year, Mr Cotton said the RABDF was also continuing to call for a ban on livestock imports from countries infected with the disease.

“Furthermore, we are also seeking greater controls on all livestock imports into the UK. Future import rules must allow for animals to be held in quarantine for long, specified periods interspersed with frequent vet inspections.”

The continued import of heifer replacements was complete madness and put the whole UK livestock industry at risk, when in fact farmers could secure quality genetics by importing either semen or embryos, he said. “If TB was under control or eradicated I am certain we would not have to import nearly as many animals,” he added.

• For more from the Dairy Event and Livestock Show click here. Worried about rising inputs? Take part in our Input Price Monitor survey here.

dairytech