British dairy farmers are firmly at bottom of milk price league

HOW much rain can there be? We lost count of the amount of rain fallen since the prolonged dry spell ended, but it is over five inches, which is remarkable.

The gateways to the grazing fields are quite a mess, and no tractor operations have taken place. Grass growth continues apace due to the warm temperatures, and the maize crop is now assured; whatever happens next? The maize could do with plenty of sunshine from now on, as could the cereal farmers with harvest upon them (early), and of course school holidays start very soon.

Some of the new seeds that we battled so hard to keep alive are now been grazed by young-stock, and I might even be cutting the other re-seeded fields for silage!

The recovery has been remarkable, and has saved the day as I was not looking forward to having to start seeding all over again. The hedgerows are now full of blackberries, still in their early stages of course, but with sunshine to come it looks like a good crop.

Sloes will also be in abundance, and our cow tracks are now hemmed in on both sides by prolific buddleia which are in full bloom and don’t seem to care what the weather throws at them.

Even that terrible garden pest, bindweed, to be found everywhere in our hedgerows, has larger and very pretty trumpets this year. In fact there are wild flowers all over the farm where we are not growing crops, and if all these areas were added together they represent a fair acreage.

There is plenty of evidence here that modern farming and conservation co-exists very well, and often it is nature which triumphs when it comes to enlarging its area of natural vegetation! We do need to assist in making sure that these areas do not turn into scrubland, by cutting back the bramble and other dominant plants every three years or so, and the buddleia positively thrives when we take the hedge-cutter to it.

*My Australian dairy farmer friends are suffering again. They have had the wettest six months in twenty years, and as its mid-winter, their position is very difficult.

There is no housing for cows in Australia as the winters are much kinder than ours, but this time it is very cold in Victoria, with horizontal hail and winds, with many trees blown over. Since the first of January, 24 inches of rain has fallen, whereas the total rainfall for the whole year in 2006 was 26 inches. Grazing cows is very challenging under these conditions.

Milk processors are under pressure as they flounder around, looking for a way out of the complete mess they find themselves in.

I attended the Dairy UK dinner last week, where the mood was somber, and privately many companies are looking for some assistance in finding a way to improve matters. You would have thought that it is difficult enough to trade with powerful supermarkets, without ruthlessly undercutting each other, attempting to increase market share and grow the business.

Growing volume is possible in this way, but it is a ridiculous strategy to grow volume by discounting and taking all the value out of the product. British dairy farmers are now firmly at the bottom of the European milk price league, and the Director General of Dairy UK, Jim Begg, the representative body of the milk processors, walks around shaking his head, muttering that the milk price must increase.

He has no answers, his organization might as well not exist, and he and his members have isolated the UK from the most lucrative period in world dairy commodity prices ever seen.

I’ll tell you how bad it is. New Zealand who traditionally had a milk price over the last thirty years of roughly half UK milk prices, but as almost all milk was produced from grazed grass, and no cow housing provided (therefore no machinery), and with a climate that meant that clover rich swards needed very little fertilizer; their system was profitable at this level.

Today -and I never thought I would see the day - the New Zealand price is higher than ours. It is incredible.

n The Director General of Dairy UK has spent his time touring Australia, preaching against regulation and milk contracts; lobbying both in Europe and Westminster, against proper milk contracts for UK dairy farmers.

He claims that there is no need! Furthermore, on the ombudsman issue, which is meant to protect processors such as Dairy UK’s members from powerful supermarket abuse, Jim Begg states that ‘Our members do not use the supermarket code of conduct; therefore the Ombudsman is not relevant’.

Now, you may ask yourself what sort of carry on is this. Why would processors who are being pressurized by retailers to lower prices continually, until the pips squeak, not be interested in the supermarket code of conduct and the Ombudsman?

It is precisely because they are trying to undercut each other in the market, growing volume, and are protecting their margin and passing back what is left to the farmers. We pay the price for their foolhardiness. Now the game is up and they do not know where to turn.

With the cost of energy, fertilizer and cereals increasing sharply, dairy farmers need a better milk price if they are to survive this next winter. We know this, Jim Begg and his members knows this, but the retailers are not interested.

They have become used to milk processors giving it all away, and with a recession on the high street, they are looking after consumers. Milk processors have a huge task ahead of them, having missed the best part of a year in booming commodity prices for everyone involved, those doing slightly better than others have nothing to be proud of, although it is difficult to increase prices whilst others steal your business if you do.

n Robert Wiseman Dairies has been the first (as usual) to tell the city that he will have to increase prices to dairy farmers this autumn, and that it will have to be passed on up the supply chain. Will others have the courage to follow, or will one of them see this as an opportunity to take advantage? It only takes one, and I am nervous that it could happen. Minister Jim Paice was speaking at the Dairy UK dinner, and he lambasted the processors (much to their embarrassment) for driving value out of the product, not exporting products which would provide competition and drive up prices, and he did indicate that the days of buying milk off farm today and deciding how much to pay for it some time in the future, are over.

Jim Paice did also tell us that farmers need to continue to work on efficiency and competitiveness, which is fair enough, and he did criticize some powerful retailers for abusing their power. His overall message was very clear though, he knows where the problem is and he seems minded to do something about it.

A proper contract for dairy farmers would strengthen their position, which would mean that any processor would have to consider that if they go out into the market to undercut, then it would come out of their margin and not the farmers.