Working for a sensible milk price

It’s proving to be another challenging year. Low farm-gate milk prices, escalating feed costs and prescriptive milk contracts combined with the weather and foot-and-mouth are all issues affecting our businesses which are completely outside our control.

We are a nation of dairy producers who at best are seeking to operate a sustainable business, one that is leaving sufficient profit for reinvestment purposes. However, we continue to feel our hands are firmly tied.

RABDF is the only sector specific organisation dedicated to representing the best interests of dairy farmers and we are focused on making things happen. Our priority is to continue to strive to achieve a sensible milk price for all dairy farmers or else their exodus from the industry will continue unabated.

That means farm-gate prices need to more urgently reflect changes in the cost of production. For example, this year’s winter feed bills are set to rise by a minimum average £40/t, a figure that should be incorporated into all milk prices with immediate effect.

Farm-gate milk prices have historically lagged behind the costs farmers have to pay out, a position which is becoming increasingly acute. Feed costs have increased consistently for months, while world dairy commodity prices have simultaneously risen at an extraordinary rate. However, these price increases have yet to be fully passed on to farmers leaving them in a situation of constant under re-coupment of production costs.

The issue prompted RABDF to examine milk contracts in some detail. We concluded many contracts locked farmers in to lengthy agreements and contained unreasonable clauses along with unworkable demands. These findings led us to launch a campaign for milk contracts to be less prescriptive and more in touch with the realities of the marketplace. We have called for farm-gate milk prices to track the world market. Arable farmers have a transparent market dairy producers need to be able to follow suit.

Our activities extend beyond lobbying to technical matters and earlier this year we tackled the feed cost issue. Aware of the fact that grazed grass is the cheapest form of forage, we joined forces with BGS and MDC to stage four early grazing days. More than 600 farmers attended and found out more about how to make up to an extra 2p/litre, simply by introducing better grassland management.

Again we offered producers ideas on how to improve their efficiency at our annual open day which attracted more than 500 visitors and this year was hosted by RABDF/NMR Gold Cup winners, Grosvenor Farms.

However, the key activity in RABDF’s annual programme is organising the Dairy Event, which provides all farmers with the opportunity to explore the most comprehensive range of technical developments and business issues. Furthermore, the Dairy Event is organised by farmers for farmers, with the revenues generated allowing RABDF to continue to work on behalf of the industry and represent the best interests of dairy farmers.

We don’t have to reiterate the fact we recognise that dairy farmers continue under immense pressure. DEFRA’s provisional farm-gate milk price for June is 18.08p/litre, up 7.4% on the year, a trend we wholeheartedly welcome. However, according to the joint RABDF/NFU report British Milk – What Price 2007?, the average cost of production during the 2006/07 milk year stood at 21.32p/litre, a figure that doesn’t take into account the exceptional costs farmers faced, never mind provide any scope for essential business reinvestment.

As we continue to work hard for all British dairy farmers, achieving that essential surplus for reinvestment will be at the forefront of our agenda in order to help ensure dairy farmers are able to build a sustainable and viable future.

*Lyndon Edwards is chairman of RABDF and runs a 210-cow milking herd on 560 acres at Chepstow, Monmouthshire.

Dairy Event 2007