With little control if any over milk income, more producers are finding ways to add value to the milk they produce. But what factors should you consider in doing so?
James Hague of Lyde Green Farm, Basingstoke, told delegates at the Kingshay conference that with his business, he took the decision to bypass the whole of the supply chain and sell directly to the end consumer.
“This means we take all the profit, not just the scraps.”
Almost all of the 100,000 homes in his catchment area will buy milk from one source or another.
And for most this will be from a supermarket at 50p/litre, of which little is passed back to the farmer.
“Our aim is to take these customers away from the supermarkets and get them to pay a sensible amount of money for their milk, as well as retaining profits within farming,” he said.
“Reviving doorstep trade is an essential part of reconnecting with customers – once you have a customer then you can start increasing their spend with you rather than the supermarket.”
He also told delegates how he avoided shops as they end up with control over the end milk price, screwing down any possible margin.
“The only shops we are prepared to supply are farm shops, as we suggest their retail price and get a sensible margin for them and us.”
The most important thing is to add value, he stressed.
“The milk we provide is mostly less than 24 hours old by the time it lands on their doorstep and they really can taste the difference, but this alone is not enough to maintain custom.
“The price has to be set above supermarket prices, but not too high to drive them back to the cheaper alternative.
We keep the product fresh in their minds by giving them a farm update every four weeks with their bill.”
This informs them about events on the farm and helps them reconnect with the land.
They can also visit the farm and see the cows, he added.
Although the processing stage is not a difficult process it does require new skills and time to do the job effectively.
He pointed out investment in plant needs to be carefully planned out, as well as considerations made for equipment, such as pasteuriser, cream separator, bulk tanks, bottle filler, bottle washer and walk-in refrigeration storage.
But time is the biggest limiting factor.
“Time spent on retailing and processing is time taken away from cows and crops.”
Mr Hague also spoke of how the farm has developed a franchising system based on his own processing and retailing business.
“This allows other farmers to use what we have developed and get them off the ground much quicker and without making costly mistakes.
By using a single brand of Daisy’s Farm Fresh Milk, we can work together to improve marketing and provide support for one another,” he said.