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?