The past year has been one of the most difficult I have experienced as a dairy farmer, with milk prices tumbling down an average of 25% across the UK if you compare July figures. We all know that hides a more shocking truth though – some of you will have seen your milk price drop by over 50% in that same period.
Supply chain
Many of the movements over the summer by retailers have come after strong pressure from farmers and consumers. We need more retailers and companies sourcing dairy products to take ownership of their supply chain and to ensure that dairy farmers are getting a fair and transparent price. This is the message the NFU has taken to retailers and food service over the summer, and will continue to drive this home to food manufacturers and other end users of dairy products.
Brussels
The €500million EU crisis fund was a start. We lobbied for these funds to go promptly to those who needed it most, and despite the challenges associated with this it has gone directly to dairy farmers earlier than forecast. In Brussels we’re also putting pressure on the Commission to develop its work on ensuring a fair and equitable EU supply chain and this may mean reopening the EU dairy package which has so far done little to support UK dairy farmers or increase their bargaining power. The European Commission also has a role in collecting real-time data on prices and production so that we can at last have a fully functioning EU dairy futures market and some ability for our milk buyers and farmers to manage volatility.
Producer representation
Back here in the UK, there are a number of areas we need to work on to ensure that farmers have the ability to better manage extreme volatility. This includes stronger producer representation so that simple things such as expansion plans at buyer and farmer level can be clearly discussed and understood. I don’t see producers working together to manage supply, improve milk quality or even market the end product as a threat to the milk buyer - done correctly it can benefit both parties and lead to more mature, trusting relationships.
Risk management
We are also working with milk buyers and end users to help provide risk management options to farmers. We already have some in retailer aligned COP contracts or formulaic pricing arrangements linked to certain input costs. In many cases the end purchaser of the dairy product wants just as much stability on price as the farmer. We really need a functioning futures market. Those that want to ride the dairy rollercoaster can do so but there should be options in place for those who decide not to, or want to limit their exposure to risk.
Consumer support
I have been hugely impressed over the past few months by the interest and support of consumers. During Red Tractor Week NFU dairy board members visited retailers across the country to talk to consumers about the importance of looking for the Red Tractor label on dairy products. Everyone that took part saw it as a positive, productive campaign – and that included the retail store managers. Hopefully next year we’ll see more farmers talking to consumers about the meaning of this logo, but alongside that, I hope to see it on more dairy products, both own label and branded.
Labelling
What has been missed in many of the retail announcements over the past few months is also the commitment to source more British dairy products and display the Red Tractor on product. Clearly we need better labelling and the NFU is working with Defra to close the ‘gaps’ in current codes and at EU level lobbying for mandatory country of origin labelling. . Though driving demand for British won’t pull us out of this current market downturn, it can help convert more milk into added value markets and create future opportunities. This is something everyone can help with.
No-one can predict what will happen to the dairy market in the short to medium term. That’s not something the NFU has, or will do. Our job is to ensure our members have the same or better opportunities to produce milk as dairy farmers elsewhere in Europe and across the world regardless of the market situation. To do that we lobby at every level possible to ensure farmers concerns are raised and acted upon – be that with Government, banks, retailers, milk processors, allied industries, consumers, or any other stakeholder.