In an exclusive opinion article for Farmers Weekly, dairy farmer and former NFU vice president Gwyn Jones calls for change within the dairy sector to help the industry move forward.
“The biggest challenge in changing the dairy industry is without doubt the dairy processing companies,” writes Mr Jones.
“They are the ones who have systematically destroyed the market for our product in a race to the bottom, as they compete for market share, using our money to finance losses and maintain their margin come what may.
“Think about it, here is a market with no import challenge (other than a bit of UHT milk), with a fantastic product, bought as a daily necessity by the consumer, and therefore a must-have on the shelf for every single retailer in the land. Only fools could have made such a mess of it.
“Jim Paice was right on three counts in London. He is a friend of the industry, we should face up to our responsibilities and he is right to ask the question about water; a very easy question to answer. Water is free from the tap and of equal, if not superior, quality to water sold on the shelf, but water is branded and marketed in supermarkets and a willing consumer pays the price.
“Milk is a fantastic, fresh, wholesome food that is full of goodness and energy, versatile, tasty and well packaged. Milk is sold as a commodity by processors, that are interested only in selling quantity. There is no sense of value, as retailers use it as a KPI (key price indicator) in order to draw people to their stores. The retailer makes a good margin, the processor makes a small but guaranteed margin, and the farmer, who works all hours to produce milk, has more money invested a litre than anyone else. He gets what is left, and this time around it is less than nothing.
“I put it to you that a voluntary code with these guys will be nothing other than an agreed licence to continue the abuse. They have resisted change for years, and this time they come to the table at the eleventh hour to offer what? The minimum they can get away with in order to carry on as before, hiding behind ‘Office of Fair Trading’ rules when it suits. Who do you think filled Jim Paice’s head with cost of production nonsense in London? They are always doing it to avoid scrutiny. We need legislation and Mr Paice needs to live up to the rhetoric, giving us time to form and develop a new structure.
“I call for a change of director general at Dairy UK. The present incumbent has proven over a number of years to be one of the major stumbling blocks to change. While Jim Begg remains at Dairy UK the culture of abuse will remain. Mr Begg presides over processors who are not competitive in manufacturing, do not export (as picked up by Mr Paice) and have an island mentality to their industry – an industry which has been and still is shrinking in production.
“To quote Clive Black in the Financial Times back in April: ‘The business underscores the sheer folly of an industry that showed cataclysmic indiscipline over the past two years in a dash to gain and maintain share – a dash that delivered a collapsed liquid market for all concerned’.
“I call for every farmer representative to be re-elected this autumn. There are a few who have done great harm to the industry, and there are many who would struggle to take on the challenges ahead. It is our responsibility as dairy farmers to make this happen. If we insist on an election for all positions this autumn, no one can escape democracy. If this is not done, you will not see a better future. We need individuals of great ability and strength of character, and they need not necessarily all be farmers. Producer organisations need to be formed, and people of real ability and determination in Scotland Wales and England must be found. I expect Scotland will lead the way with their government on side, and real opportunity for change will attract the right people.
“This industry will not change unless we do it for ourselves. It will not be easy – there are no quick fixes. It will need each one of us to play our part, but there has never been an opportunity such as the one which is presented to us today. We are collectively in a very strong position. If we are determined enough, resist the temptation to splinter, pull together, have a proper strategy to harness the main elements of the struggle and keep the focus laser-sharp on the ‘pressure-points’, we can succeed.”
Gwyn Jones is a dairy farmer from West Sussex. He was NFU vice president from February 2010 until February 2012.