Coronavirus: Chancellor asked to intervene in dairy crisis

Chancellor Rishi Sunak has been urged to put his money where his mouth is and pledge financial support for struggling dairy farmers.

Mr Sunak is Conservative MP for the rural constituency of Richmond, in North Yorkshire, which is home to several hundred dairy producers whose milk is used to create iconic Wensleydale cheese.

In 2015, at the height of the last dairy crisis which saw farmgate milk prices plunge to little more than 20p/litre, Mr Sunak penned his own 10-point plan (PDF) to help dairy farmers.

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“Without its dairy farmers, Yorkshire’s magical landscape would soon see its lush fields turn to scrub and its dry-stone walls go unrepaired,” Mr Sunak said at that time.

Not actioned

However, many of the points included in his plan still have not been actioned by the government – and if they were, it would make a huge difference to hard-pressed dairy farming businesses, especially now demand is affected by the coronavirus lockdown.

For example, Mr Sunak called for an end to milk being used as a “loss leader” by supermarkets, more retailers giving dairy farmers a fair price for their products, better labelling, more supply chain fairness and transparency, a working dairy futures market, more domestic production of dairy products and a government pledge to buy British.

Mr Sunak said back then there was “no magic wand” to solve the global problems with the dairy market. But he called for timely CAP payments and flexibility from banks to help vulnerable dairy farmers suffering cashflow problems.

Milk price cuts

NFU dairy board chairman Michael Oakes, who runs a dairy farming business near Bromsgrove, told Farmers Weekly he was encouraged to see that Mr Sunak expressed support for dairy farmers during the last dairy crisis. But, for many, he said the problems are worse now than in 2015.

“The chancellor is clued-up about dairy farming and I was impressed with him and the work he did for the dairy industry when he sat on the environment, food and rural affairs select committee,” said Mr Oakes.

“Currently, about a quarter of dairy farm businesses are unviable due to a fall in demand for their milk during the coronavirus crisis. About 500 to 700 farmers have had substantial price cuts, for example 5p/litre in the last two weeks from Medina, or deferred payments.

“They are faced with not being able to pay their bills or staff. How do you run a business when you have got no cashflow coming in?”

Defra offered a £10m support package for the fishing sector last week. But Defra secretary George Eustice has ruled out similar support for dairy industry, arguing that the current situation is “a temporary dislocation in the market affecting a minority of farmers”.

Mr Oakes added: “We are working hard to lobby the government to introduce hardship grants for struggling dairy farmers.

“The current schemes on offer are proving difficult for dairy farms to access. The hospitality grant does not apply to us: you cannot furlough the staff, you cannot furlough the cows.

“Dairy farmers need additional support and they need it now.”

Contracts ‘need sorting out’

One dairy farmer in Richmond, who did not want to be named, said: “Rishi Sunak has been thrown in at the deep end as chancellor. He’s doing a good job, but he needs to look after farmers and dairy farmers.

“Our feed prices are going up and our farmgate prices are going down. We are now producing milk at below the cost of production. There is pain and some dairy farmers will go out of business.

“Some farmers are calling for a return of the Milk Marketing Board. I’m not sure about this, but contracts definitely need to be sorted out.

“It can’t be right that Arla farmers are getting 5p/litre more to produce the same product. Some of the other dairy owners are just creaming the profits off and fleecing the farmers.”

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