Two simple truths from commentator/comedian Marcus Brigstocke and dairy activist David Handley

All food producers should be paid above production costs

In last week’s Now Show, in a list of sensible reforms proposed, Marcus Brigstocke said that dairy farmers could be paid 1p above production costs instead of 1p below the cost of milk production.

Prices fall when farmers oversupply the market – details in the Scottish Farmer.

Robert Craig, who farms an all-grass dairy unit in north-east Cumbria writes in the Farmers Weekly: “Just as we start to get used to a good milk price, the long-awaited optimism our dairy industry needed seems to have come to a shuddering halt (if it hasn’t yet, it’s about to). For the first time in 20 years, dairy cow numbers are rising across the EU. There’s nothing like a good milk price to help strengthen supply. In 12 months’ time quotas will be history and a new era of dairy farming will be dawning on us and I think the next few years are going to be as challenging as we’ve seen for some time”.

The Shropshire Star quotes the words of David Handley (Farmers For Action): “Dairy farmers know we have got to control supply management, we have been here before and when we have been down this road we know this is the only outcome”.

He added that many farmers have gone ahead and produced milk – highly perishable – without considering the fact that the UK has not got the processing capacity to turn it into products.

It’s the market, stupid

Martin Armstrong, head of Muller’s group milk supply, said: “Whilst any correction in the farm-gate price is disappointing, the market is simply responding to higher levels of supply and a weakness in demand for dairy commodities.

And Farming Today’s account?

In the late ‘90s, Radio 4’s Farming Today which ‘faced the chop’ because of its frank and truthful coverage of BSE and FMD issues is now proud that its ‘the rural agenda’ – and that of Countryfile – has made countryside “relevant to people’s lives as both a playground and a source of affordable and safe food” – in that order of priority?

On Tuesday, opening and closing with the ‘playground’, its order of attention was:

• Newts,
• Pests in cereal,
• Pirbright safety standards Prosecution,
• Milk Prices
• Dawn chorus

The milk prices issue was given 3 minutes and then the programme moved thankfully on to the dawn chorus.

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A fair deal for sheep farmers?

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Exporters and other middlemen profit as UK & NZ farmers are underpaid

 Picture from Cumbrian Commoners’ website

So often the BBC appears to be underpinning government trade policy – now Farming Today extols their export drive, sending Charlotte Smith to visit a cutting plant which handles over 20,000 lambs per week, meeting the export manager who divides his time between the factory, and trade stands across the world.

Meanwhile, we note that Britain imported 86,100 tonnes product weight of sheep meat in 2012.

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Depressed prices

In April, Chief executive of the National Sheep Association (NSA) Phil Stocker records that the timings of NZ imports of legs and loins “caused a massive disruption in our domestic market”.

Head of trade development at Eblex Peter Hardwick told MeatInfo.co.uk that lamb from NZ had played a significant role on depressing the price of UK lamb “right through until the late autumn”. He said that they are importing lamb legs at a lower price and at a promotional time of the year. NZ January imports were up 77% and unit values 25% cheaper, 35% higher in volume than 2011 levels and 20% below 2011 levels in price – “a massive increase”.

As low prices dismay sheep farmers, they are told to ‘market them correctly’, by EBLEX; Welsh hill farmers point out that the price per kilo for lightweight and super-lightweight lambs has been well below the average price for lambs with higher weights that reach supermarket specification.

 

New Zealand sheep farmers are also suffering from poor prices

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Hardwick thinks that NZ sold ‘unnecessarily weakly’ into the UK market, at levels that didn’t even give their farmers adequate returns.

Beef + Lamb New Zealand’s chairman Mike Petersen agrees, drawing attention to the struggle NZ farmers had been facing. He said sheep farmers in his country, such as those here in the UK, were also struggling with “unsustainable returns for lamb”,

 

As the export manager sells his Welsh lamb to Canada, Singapore, Ghana and France, production in Britain and New Zealand is undermined by the EXIM roundabout which underpays British and New Zealand farmers who make it all possible.

 

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David Handley warns dairy farmers to be wary of the proposed increase in milk production sought by the NFU and processors

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When Farming Today (BBC Radio 4) discussed milk price rises at the Dairy Show, Farmers for Action representative David Handley commended the increase to the base price taking the Arla/AFMP standard litre to 33.13 pence on Nov.1^st.

The NFU and processors seek an increase in milk production, but Mr Handley warns that history shows rising supply leads to lower milk prices for the producer.

As the economics textbook puts it:

When supply falls short of planned output, for a given demand, price will rise.

When actual output is in excess of planned output, for a given level of demand, market price will fall. 

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Today we welcome the IPA news that “the October league-topping price is the Muller-Wiseman formula price at 34.55p, which even eclipses the amount paid by the two regular chart toppers of Waitrose and M&S”.

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An uncertain future for the dairy industry in 2013

On January 1^st, Farming Today’s Anna Hill asked what 2013 might hold for the dairy industry following 2012’s blockades, negotiations and boycotts. Her use of language betrayed her stance as she described farmers mobilising to fight for what they saw as a fair price for milk and later spoke of protests fizzling out.

David Handley elsewhere put the record straight, saying that farmers had mobilised to fight cumulative cuts in milk prices. FFA seeks a fair price now and also in the future. At the moment estimates of a fair price range from 32-34ppl – see the Scottish Farmer,  FG comments and Shropshire dairy producer Roger Evans in Cow Management, p20.

 

Farming Today rendered inoffensive

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Fifteen years ago in the late ‘90s, Farming Today ‘faced the chop’ because of its brutally frank coverage of BSE & FMD issues and is now proud that its ‘the rural agenda’ – and that of Countryfile – has made countryside “now relevant to people’s lives as both a playground and a source of affordable and safe food.”

 

Dairy farmers continue to move away from milk production

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On December 14^th in Norwich Louis and Fran Baugh reluctantly left dairying and sold their herd of 160 pedigree Holsteins because low milk prices gave no margin for reinvestment needed to farm buildings and the milking parlour (above).

 

Four voices

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There was a recording of James Paice addressing the London Dairy Coalition event and asking if farmers were sure they had done everything to reduce production costs. Barry Smith from Derbyshire said angrily that he had heard not one word which encouraged him to stay in farming.

Rob Newbery, the NFU’s chief dairy adviser, said that he hoped a voluntary code would address bad practice and protect producers and gave a clear signal that if this does not happen there will have to be legal protection.

Jim Begg of Dairy UK, who works closely with the processing industry, said that the campaigners had trodden a thin line between protest and disrupting the business of dairy companies, and that was not helping anyone. Processors regrettably are driven by market circumstances and cannot pay out what they don’t get in. The four major processors had announced sudden cuts, due, he said, to market decline.

Industry consultant, Ian Potter commented that farmers had been watching market movements and expected prices to ease back but the Dairy Crest price cuts were so large that even DEFRA condemned them and farmers were selling milk at well below costs of production. He is aware that processors are being squeezed by their customers, the supermarkets, but deplored, without naming Freshways, the buying of milk from Belgium at 31ppl whilst paying English producers less than 25pp.

 

In more outspoken vein in his July newsletter Ian Potter said:

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We keep returning to the fact this market does not work and the only people who will change it are the dairy farmers.  Yes there is evidence that both large and small retailers are very, very nervous and that their previous aggressive attitude has weakened this week. Some who had the nerve to hold their greedy selfish plate out for a share of the August price drops have even wound back this request. You may get a short term fix from embarrassed retailers but the problem will return.

Yes the root problems are greedy, dispassionate, morally bankrupt retailers (both large and small) who want ever cheaper milk so they can take an ever bigger their slice of the cake for themselves.

 

Adding in August:

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There is an awful lot wrong and immoral with this supply chain. There’s the obvious to start with – the obscenely unfair share of the margins. But there are other unseen, shady activities too. How many “back door” payments do retailers “force” processors to make, for example, which muddy the waters?  The ones I am told about make my eyes water, let alone theirs. The bottom line is dairy farmers and processors are paying for cheap milk, for this immoral activity and wanton greed. And if recent drops are not quickly reversed the cows themselves will pay the price: more, inevitably, will be culled.

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In spring the Dairy Crest initiative will get under way and all will be watching the operation of the new voluntary dairy code of contract practice. In the Farming Today programme, Ian Potter concluded that all must try to make it work because dialogue is better than protest.

 

The BBC Farming Today broadcast can be heard again for five days here: http://www.bbc.co.uk/programmes/b01phfsr