Tag Archives: Arla

Dairy industry collapsing: stabilised by MacDonald government, 61 years later – thrown to the wolves by Margaret Thatcher

In recent years, dairy prices have been on a rollercoaster: at one point in 2015, farmers were receiving less money for their milk than it cost to produce.

Arla has reduced the price it pays farmers for milk. The drop of 1.73 pence follows a small price reduction last month, giving Arla’s British producers 29.27 pence per litre.

Andrew Cozens (below) has a herd of 230 dairy cattle near Stroud, and sells his milk to Arla.

Lucy Taylor interviewed him for Farming Today (Link to audio, Mr Cozens at 8mins 20 secs.

He remembered the 2015 drop to 16p per litre when all the profits saved from earlier years were used up just to keep going. The price drop in January was expected but a further cut in February had been a ‘bolt from the blue’; he added that if the forecasts of further drastic falls in May were correct he would have to sell up and do something else.

NFU Scotland Vice President Gary Mitchell said that dairy farmers in UK have little confidence that the supply chain is fairly sharing returns from high value dairy products with those milking the cows and must deliver fairer returns to milk producers.

UK Milk Prices – The Twenty Years War: an archived 2015 article by Bruce Jobson, published in a dairy breeders’ magazine. Edited extracts:

Farmers were at the mercy of the individual dairies and prices were extremely volatile. In order to establish a fair and coherent system, the British Government established the Milk Marketing Board (MMB) system for England and Wales as well as, separate Boards for Scotland and Northern Ireland Milk Marketing Board. Set up in 1933 the MMBs pooled all the milk and guaranteed a minimum price to farmers, providing them with a regular service, and a regular cheque.

“The system proved successful and capable of withstanding the instability of the markets. The collective strength (remember: divide and conquer) provided a negotiation position and a pricing system that secured the liquid market price”.

Deregulation and privatisation were part of the Thatcher Government ideology. Though milk producers voted 99.9% to maintain the MMB system, Thatcher abolished the MMB in October 1994 in England, Wales and Scotland and in Northern Ireland in February 1995. In a democratic world the wishes of 99.9% of UK farmers not to abolish the MMB system would, and should have, prevailed. As a result, thousands of dairy farmers were subsequently ruined and this in turn created the rise of division; and supermarket power.

According to the Farmers Guardian, the farm gate price fell by 28% in real terms between 1994 and 2010. “With no MMB as the counterbalance, in 2000 our farm’s milk began a price drop of 40% in 18 months,” recalled Anthony Bradley, a former farmer from the Yorkshire Dales. £50,000 per annum “effectively walked off” the family farm. “That was the end for us as dairy farmers.” In December 2014, an estimated 16 dairy farmers per week were leaving the industry. For some, enough was enough.

In 1995, there were 35,000+ dairy farms in the UK, now there are 13,000+ (Dairy industry in the UK: Statistics, 2016).

Will the next British government institute a similar co-operative, retaining the advantages of the MMB and restoring the country’s collapsing dairy industry?





The Royal Association of British Dairy Farmers: 2003 and 2017

In August 2003 the Farmers Guardian reported that a series of industry-wide meetings, called by the Royal Association of British Dairy Farmers (RABDF), were held for a year to discuss the true costs of milk production.

Members of RABDF, with independent research consultancies and dairy farmers, produced a report showing that the cost of milk production is much higher than current estimates state. The true cost of milk production was found to be between 20 and 23p a litre, rather than the 18p currently being paid. Dairy farmers were working an average 70-hour week with only a few days holiday each year and low milk prices have left them earning just £2.90 an hour.

The chairman, Tim Brigstocke, said that problem areas were fixed costs, farm overheads, farmer remuneration, family labour costs, pensions and staff development had not been included in current assessments.

The new guidelines proposed by the RABDF included gross costs such as feed, forage, bedding, and vet’s bills; operational costs like labour (£10 an hour deemed a reasonable figure to factor into the equation, given the level of skills required in dairying), machinery, depreciation, property-related, unpaid family labour and resource costs: rent, quota leasing and finance costs. Mr Brigstocke urged producers to adopt these guidelines to arrive at a realistic picture of how much their businesses were costing them.

A Lancashire dairy farmer contacted this site to voice concern about the very differently focussed RABDF of 2017 and its ‘elitist style’.

RABDF, now described as the ‘the new secretariat to the Trehane Trust’, is advertising its October conference in Birdcage Walk London for ‘leading farmers’ who are to be granted the opportunity to ‘rub shoulders’ with policy makers and supply chain leaders. The conference will be held in conjunction with the Trehane Trust which funds research into all aspects of the dairy supply chain, from production to new product development and consumer trends in the dairy sector – but the crucial subject of farmgate prices is not listed.

One of the invited speakers at this most opulent venue (above) is from Arla – a downward trend-setter, announcing a price reduction for the April payment – the first milk price drop in 2017 by a major UK milk buyer. A further online search will reveal that this company has closed several processing plants making hundreds of workers unemployed, though the net profit of the Arla Group last year was €356 million.

The key findings of Trehane Fellowship recipient Mike Houghton of Andersons will be included. He has been researching future options and opportunities for the sector at home and abroad, using his contacts in Canada and the USA to find out more about their support systems, in particular crop insurance schemes and futures markets and consulting key people within the legal profession and the insurance industry to obtain a different perspective on the topic. 

Tim Brigstocke is now RABDF’s policy director

When this ‘Business and Policy Conference’ has taken place, will he help the RABDF to come down to earth in the interests of the average dairy farmer – arguably an endangered species?

In the interests of food security, will the RABDF present the facts about rising costs but low and fluctuating farmgate prices to the complicit policy makers and supply chain leaders, with whom wealthy farmers are being invited to rub shoulders?

Or will they continue their failed policies as the dairy sector continues to decline and foreign importers take over?