NFU warns of further exodus from dairying

British dairying is losing critical mass and, unless certain short-term challenges are met, few will be around to enjoy the better times that lie ahead.


Presenting the NFU’s Survival Plan for British Dairying at the dairy breakout session at this week’s NFU conference in Birmingham, chief adviser Hailey Campbell-Gibbons warned that the sector was at a “tipping point”. Two farmers a day were still leaving the industry and British milk production was heading towards just 11bn litres a year.


“We are not even able to meet our core market requirements for liquid milk and cheese, and I believe to prop up our sector with imports is unviable,” she said.


There was particular concern that farmgate prices were now falling, even though the sector continued to be supported by tight supplies and weak sterling. The fact that the UK traded little in commodities and increasing volumes were linked to dedicated supply chains made it hard to understand why processors were cutting prices now, she added.


With rising input costs, falling cattle numbers due to bovine TB and investments to be made to comply with new nitrates rules, urgent action was called for.


NFU dairy board chairman Gwyn Jones outlined various ways in which the whole supply chain could act to mitigate these problems, and so prevent a further erosion of the milk supply base (see table).


Manufacturers and retailers were asked to make more use of the Red Tractor logo on all packaging, milk buyers were urged to offer farmers better contracts and government was encouraged to reduce regulation and buy more British.


Mr Jones was particularly critical of milk processors. “Many are in denial about the inefficiencies in their operations,” he said. “Farmers cannot be regarded as the blank cheque through which they can redress these inefficiencies.”


He was also critical of buyers who had cut farmgate prices in recent months, accusing them of letting down retailers who wanted farmers to have a secure price.


Arthur Reeves of Dairy Crest said that he shared the NFU’s desire for stable prices. “But this would be easier of processors knew how much milk we were going to get,” he said. “Our contract means we have to take all the milk that producers supply.”


Mr Jones said that the NFU had considered fixed volume contracts, but they would have to carry a price premium. Producers should also be free to sell any surplus milk to whoever they wanted.


DairyCo chief executive Ken Boyns said the idea of fixed contracts had been around for some time. “Its age is coming.”








SURVIVAL PLAN FOR BRITISH DAIRYING


The NFU’s plan includes 35 different recommendations, including the following:


* Market development – all manufacturers and retailers should promote the Red Tractor logo on all dairy products.


* Public procurement – the government should increase the procurement of British cheese across all departments.


* Efficiency – farmers should co-operate to find the cheapest inputs and make more use of benchmarking tools.


* Processors – should offer improved contracts with long-term guarantees about milk price.


* Retailers – more retailers should offer dedicated supply chains for milk, and the concept should be extended to suppliers of cheese.


* Finance – the banks should pass on all interest rate cuts in full, and continue to make finance available to dairy farmers looking to invest.


* Regulation – government should help in three ways, by introducing a TB eradication programme, by making rural development funds available to dairy farmers and by reducing inspections for “farm assured” units.