Milk prices have crashed under pressure from a
combination of rising supply and falling demand, particularly as a result of
lower-than-expected demand from China and Russia's ban on food imports. One
factor that few people saw coming was Moscow's decision to ban EU dairy
products, taken in response to sanctions over the Ukraine conflict, this has
led to some 2.5 billion litres of milk not being sold in Russia.
The House of Commons Environment, Food and Rural
Affairs Committee has revealed that Dairy farmers are being forced out of
business every week by factors beyond their control. The Committee has called
for the powers of the government's groceries watchdog to be expanded to cover
dairy suppliers; The Westminster government has said that it was doing all it
could to help farmers cope with the "volatility of the global market".
Despite all the rhetoric, I don’t expect the
current or successive Westminster UK Governments to take any meaningful action
to help our dairy farmers (or any of our farmers for that matter). Previous
failures to act, I suspect are due to a combination of nice financial
inducements from large Supermarkets and a more marked indifference to the
agricultural sector.
At the end of the day if we want quality milk
and dairy products (produced from UK milk or better made in Wales) then we will
have to change the way we buy, then our farmers will get a better deal and we
will get a quality product. One consequence
of how we buy and how our milk is produced for us and how it is sold to us is
that the number of dairy farmers in Wales dropped by a third in five years (up
to December 2009) and this was despite repeated warnings that more needed to be
done to save the industry.
Before our farmers, dairy or otherwise, are
driven out of business entirely they need action not words. If our governments
at all levels (including the as far as agriculture is concerned apparently
indifferent Labour in Wales run Welsh Government) do nothing then the future
for agriculture may be grim, semi industrial and serviced by cheap (and
probably exploited) migrant workers. Industrial milk production much trumpeted
by some as the saviour of the dairy industry but it is not without its problems.
There
are waste issues, slurry production being one of them, which can be enormously
toxic and environmentally damaging. There are also likely to be animal welfare
issues when it comes to industrial farming. Modern cows to produce large
amounts of cheap milk, a modern Frisian may produce as much 4 times as much
milk as equivalent cows did 50 years but it only has three (milking years) in
which to do this.
Historically the old answer to low milk prices
or a surplus was to turn excess milk into other dairy products, like butter,
cream, cheese and yoghurt's. The problem we in Wales face is that many local
Welsh dairies serving our urban centres are no longer in business – some around
Cardiff were bought up and sold off for housing and diary operations in some
areas relocated outside of Wales. This means that we in Wales miss out, as
Dairy products are potentially big business as some of our more successful
smaller organic producers have proved.
The development of railway communications during
the industrial revolution provided the means for rapid delivery of farmer’s
milk to towns and cities and lead to a growth of diary production. The milkman
delivered direct to our doorsteps, his near demise came later as a direct
result of super market price-cutting which has now, more or less, effectively
killed him off. The decimation of rural railways following a Conservative
Government (questionably motivated) decision to favour road transport weakened
the very infrastructure that had driven an expansion of the dairy
industry.
A 29 or 30 pence (gate price) litre of milk may
end up being sold for 15 times as much, people pay good money for ‘health
yogurt’ – which with the addition of bacteria, flavouring and a marketing
campaign produce healthy profits for the companies that produce them. We have
some excellent and very successful companies and producers doing just that,
but, this potentially profitable sector of the agricultural economy in Wales is
undeveloped.
As for buying local - around 40 per cent of our
yogurt is made in France and Belgium, in 2009 more than 40 per cent of all
Cheddar sold in the UK was actually produced outside of the UK. Yogurt and
cheese aside; its a pretty similar story when it comes to butter. The bulk of
our butter comes from Denmark and Ireland, and this is despite the fact that
farm gate prices for milk remain consistently higher in Europe than here in the
UK.
We (in the UK) when compared with eleven years
ago now import almost half of our butter from abroad, cheese imports are also
up, some 60 per cent over the last eleven years (up to 2012). We are importing
products that have added-value and are busy exporting the low-value milk
products which are then ironically turned into butter, yogurt, etc and sold
right back to us.
This is madness; this is what happens in
the developing or third world, not in the first world. In the developing world
many countries have little choice but to export their raw commodities cheaply
and then have little or no choice other than to buy back manufactured products
made from their own raw materials.
Over the last 10
years Supermarkets’ margins (e.g. the amount of the price they take) on milk
have doubled. Now with a trend for both the processor and retailer to be the
same, we have a situation where they take over three quarters of the price of a
pint. We have now reached the situation where in a land once renowned for Dairy
farming and with cheap milk, we are becoming a net importer of milk. There is
little point in hoping that the Con Dem Government (or a future New Labour one)
will get its act together because they just won't.
