Blog: Gail Soutar on dairy

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Here's what she had to say:

“As we have worked hard to highlight very clearly this week, the UK dairy industry is facing an incredibly difficult time. Some farmers are now being paid their lowest milk price since 2007, at around 20p per litre.

“The global market remains volatile. This is because supply currently exceeds demand, not helped by political events such as the Russian trade embargo. On top of that, here in the UK there is further pressure arising from retailers indulging in supermarket price wars using British milk as their battle ground. 

“In the short term, this is creating serious cash flow problems for farmers, particularly for those who are trying to take advance of forecast growth for dairy worldwide and expand their business meaning heavy financial investment in most cases. Some farmers borrowed and invested heavily and are now suffering. This is far from ideal and we now need to ensure the tools are in place to help those businesses. The NFU is working across the supply chain, as well as communicating with allied industries, the main agricultural banks and HMRC to support our members.

“In the medium and long term, the European Commission’s Department for Agriculture sees the outlook for the dairy sector as very favourable as global demand continues to grow. This demand will come from outside of Europe and UK farmers will have to compete with farmers from around the world in order to benefit.

“Back in 2013, the NFU set out a clear vision looking at the different opportunities for British dairy farmers, including how they could become more competitive and get a bigger share of the dairy market in the future. The building blocks of the strategy were based on farmers here being able to invest in their businesses. They need to take on their foreign counterparts on price while seeing the sector increase its domestic production and processing capacity. Investment is vital for the dairy industry. And what is fundamental to investment is profitability and confidence - that things are going to be good in the future.

The dairy industry document, Leading the Way, which was led by the NFU, DairyUK, DairyCo and Defra, and supported by over 50 organisations across the industry, set out an ambition to improve competitiveness at all levels of the supply chain and to grow our share of domestic and international markets by creating a positive industry where farmers and processors can thrive for the benefit of British agriculture, as well as local society and the environment.

“It’s therefore important that we work together with government, consumers and other operators in the dairy supply chain to help farmers through the immediate months. We need to ensure they are able to continue to produce high quality dairy products both now and in the future. Together we must create an environment where farmers and processors have the confidence to invest to reach those secure and planned markets. For the NFU and others this means continuing to lay out a vision for the sector in the years ahead.