The Black side of the White Stuff

I was making a list of the perils which our local farmers have to face. Foot and mouth, bovine TB, blue tongue, brucellosis, the weather, market fluctuations and the bank manager are just a few.. The latter is particularly important when jus one of these threats strike. This is not to mention the rising cost of water ( already £1000 a month for many, even with their own private supply), diesel, interest rates, rodent control, feed merchants, fertilizer costs, rent and vets bills. This is by no means a full list. All this has to be taken on in the hope you will have something to sell to someone who wants to buy it.

This week some dairy farmers had to take a bashing. Dairy Farmers Great Britain (DFB) went bust on Thursday. This farmer’s co-op produced 10% of our milk requirements but had been having difficulties for some time. This led to a restructuring, with members having to put up more of an investment if they wanted to stay in the organisation. Apart from contractual obligations trying to find another buyer for your milk is by no means easy so the co-op managed to keep going. Unfortunately the members then found that the price they were getting was. It is now becoming a common complaint from dairy farmers that they are selling for less than the cost of production. While this was happening the Co-operative Society, your local store, put its milk contract out to tender in January. Since they were a major purchaser from DFB the final blow came when the new contract went to Wiseman, Dairy Crest and Yeo Valley.

The receivers have guaranteed to take the members milk for another two weeks and to pay for it. This would seem only fair but it is little consolation because members have lost all their investment in the co-op plus last months milk cheque and the first 2 days of June. The current guess at the average loss for May is £14,000 per member. This will vary according to the size of farm. This means that a major cash flow problem has arisen within the industry and a rush by dairy farmers to find a new purchaser. Their bargaining position will not be strong and the big buyers will drive a hard bargain. There will also be some smaller producers, especially those in remote areas, who will not be seen as good bets due to the costs of collection. As though this is depressing enough, some farmers will have seen the last of up to £90,000 of their investment in DFB. Various reasons are being circulated as to where it all went wrong and we will have to await the receiver’s findings in the autumn. In the meantime we should expect more to leave the industry and imports of milk to increase.

The retailers say they don’t make much profit on milk. This might have something to do milk being used as a lost leader, presumably with the loss being borne by the farmer. They also say that their alleged 50% mark up on hard cheese is not supported by the evidence. Unfortunately the evidence seems to suggest that more upland farmers will be leaving the industry, never to be replaced. In the meantime the consumer should realise that more milk will be imported while home grown milk will come from cows who never see a blade of grass and are fed on imported feed stuff harvested from cleared tropical forest areas. The end losers will of course be all of us as the environment goes down hil and food security becomes a thing of the past.
Dacier