Dairy farmers need more guarantees on income

Gwyn Jones' Farm Diary
Gwyn Jones' Farm Diary

Some severe frosts last week but very nice days with plenty of sunshine, although up in the Midlands it was a bit different with plenty of fog on the motorways.

The land has dried up a little and let’s hope for a dry spell as we approach February; daffodils are out in gardens around here and the wild ones at Tillington are nearly there. Very early indeed, but no surprise really given the warm winters we currently enjoy.

The milk industry continues to attract attention as the Prime Minister spoke about the need to keep British Dairy farmers in business during difficult times. He was commenting after the release of the EFRA Report into the dairy crisis, talking of widening the grocery adjudicator’s remit so that farmers are also covered. He also suggested giving extra time for dairy farmers to pay their tax bills, and do more to encourage exports.

The EFRA report concluded that farmers need more guarantees about future income, as frequent sharp and unpredictable rises and falls in milk prices drive farmers out of business each week.

“The volatility of worldwide and domestic milk markets is making financial planning and investments impossible for small producers, unable to hedge against changes beyond their control,” said Anne McIntosh Chair of the Committee and Conservative MP.

Farmers for Action have threatened to shut down Britain’s biggest dairy processors if farm gate prices fall any further. Another price cut and Arla Foods will be shut down within a fortnight was David Handley’s warning.

Arla will be announcing its milk price for February at the end of this month, and as a European farmer owned co-operative, it is difficult to imagine that it would pay any less to its owners than strictly necessary, but they have just won a contract to supply Morrison’s with more milk at the expense of Dairy Crest and I suspect that FFA believe it was done on price.

Whilst supermarkets certainly don’t help, and processors are forever locked into a huge struggle to win business and grow, it is the world market which has caused this drop in price and quite frankly there is very little that anyone can do until it starts to recover and thankfully there are a few signs that it may be starting to do just that, although it will be slow. It just annoys farmers intensely to see their milk devalued in the shops; used to bring in customers from other stores by offering milk and a few other staples at very low prices.

They also get pretty upset that the 7% of milk traded globally sets their price in the UK, where we are a very long way from supplying our own market which is one of the best markets in the world.

Liquid milk is produced here, it would be too costly to bring in from abroad and I doubt British shoppers want foreign milk anyway. Given that it is therefore a captured market which should have real value; it is not difficult to understand the frustration as powerful retailers drive the value out of that opportunity as they wage war on each other daily.

Sainsbury’s took an advert out last week showing how much it pays its farmers for liquid milk (72p for four pints), and although it paid slightly less than Tesco (73p) and Marks and Spencer (78p), it took that risk in order to demonstrate how much less Morrison’s, Asda and the discounters pay (56 to 59 pence with cost of production around 68p).

There is no doubt that dairy farmers supplying Sainsbury’s, Tesco, M&S (and indeed Waitrose) have hardly noticed the problems elsewhere as their price is based on the cost of production and has therefore been largely unaffected. Given that they are paying such a good price, no one minds so much if they want to sell it cheaply but of course they would rather not given how much it costs but they are forced to compete with Morrison’s, Asda and the discounters who pay far less for their supply from farmers.

All in all the problems with retailers are set to continue as they wage war more intensely than ever; a fight to the death of one of them quite possibly? It is not impossible that one of the giants could fall this time, such is the pressure and the stakes are so high. They are our biggest customers, but few farmers have much time for them as their track record of swapping suppliers and driving down prices is so terrible. Even those who have built large businesses on the back of supplying one of the big retailers are not immune from a drastic change of fortune when things are this bad; it will get worse before it gets better I’m afraid.

One of the protesters who have been causing so many problems during the badger cull in Gloucestershire has been spared jail, but given a 6 month suspended sentence and ordered to pay £25,000 legal costs. As protesters and single issue groups berate the cull and accuse it of not reaching its targets, they have been actively doing their best to disrupt the work in progress, intimidating and generally causing a nuisance.

Jay Tieran was accused by the judge Sir David Eady of deliberate and defiant contempt of court, as he was found guilty of nine breaches of an injunction granted to the NFU against protest groups in August 2013.

All 9 allegations of contempt levelled against Mr Tiernan by the NFU had been proved. Mr Tiernan apologised to the court and also apologised to the NFU and the farmers targeted by him and his colleagues and despite having very limited income and resources he told the court that he was prepared to make any reparation he could.

Its 50 years since Winston Churchill died, and although I was young I do remember watching the funeral on my grandparent’s black and white television realising the important historic occasion. It is amazing to think that he would not have been a particularly important figure in history before the Second World War, although he had made his mark in more ways than one, successfully and disastrously.

Cometh the hour, cometh the man; never has that been more relevant as Winston took the helm with such determination, awarding himself immense powers; practically running the country single handed for a while such was his grip.

Anything similar would be unthinkable today, and whilst we did win by the skin of our teeth and only with the help of our allies, it was a remarkable victory, led by a remarkable man.

‘Success consists of going from failure to failure without loss of enthusiasm’.