Milk price crash blamed for sudden rise in dairy dispersal sales

More than 1,000 dairy farmers are set to quit in the next 12 months as livestock markets report a surge in dispersal sale enquiries.

Auctioneers in northern England, Wales and Scotland have told Farmers Weekly that the increase shows how hard cash-strapped farmers have been hit by the milk price crash.

Livestock Auctioneers Association chief executive Chris Dodds said that the surge in farmers seeking to exit the industry was unusual and could only be attributed to plunges in milk prices.

“Some producers will not even have a milk buyer now and have no option but to take the tough decision of selling up,” he said.

Senior dairy auctioneer Glyn Lucas at Carlisle-based auctioneers Harrison and Hetherington said: “At the rate we are seeing enquiries we will have 1,000 fewer dairy producers across the UK in the next 12 months.”

Mr Lucas also reported that the majority of farms had supplied co-op First Milk, which delayed milk payments in January and cut prices on some contracts by as much as 12p/litre.

In north Wales, Gwilym Richards & Co reported that it was not just small-scale businesses that were quitting.

“We have organised the sale of a 400-cow herd and we are taking enquiries from a number of other larger farms,” said owner Gwilym Richards.

“The smaller family-run businesses are weathering the storm. But where there has been a lot of investment in increasing herd sizes, the impact of a price crash is potentially millions of pounds.

“When you take the 12p cut for some businesses and multiply it for a big herd producing, say, 5-6m litres, you can see how huge the effect is on these farms.”

Stuart Hassall, auctioneer at Wright Marshall’s Beeston Castle auction in Cheshire, warned the numbers of sales would increase in the next two months.

“The coming spring flush of milk, when cows calve and return to grass after winter, is expected to put further pressure on prices and farm businesses,” Mr Hassall said.

NFU dairy board chairman Rob Harrison described the prospect of losing 1,000 producers in a year as “tragic”.

“The numbers suggested are, sadly, looking accurate. There were 60 sales last month and the prospects are that the situation will not get better until demand improves in the autumn.”

 Tenant Farmers Association chief executive George Dunn echoed the NFU’s sentiments.

“We can only see this getting worse as we move into the spring with enhanced milk supply and product coming out of private storage.”

Mr Dunn encouraged producers to talk to their banks. “We would encourage everyone in a difficult situation to have as early a conversation with their bank manager as possible.

“We would urge all banks to take a supportive approach at this stage and ensure they are in good dialogue with their customers.”

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