British Milk Industry In Crisis

(3BL Media/Justmeans) – Farmers unions believe the milk industry is in crisis and that a solution is urgently needed to the way food is sold in Britain. This August, there have been nationwide protests by dairy and livestock farmers who claim they are facing "financial devastation" because of falling lamb and milk prices. They have called on the government to introduce long-term contracts between farmers, distributors and supermarkets and to force retailers to clearly label whether their products are British or imported. The unions have warned of “dire consequences for the farming industry and rural economy” if the way in which food is sold does not change in the near future.

Figures from AHDB Dairy, the trade body, show that the average U.K. farm gate price for milk – that’s the price that farmers are paid – has fallen by 25 percent over the last year, to 23.66p per litre. Industry experts claim it costs farmers 30p per litre to produce milk, meaning farms are out of pocket and have been badly affected by the drop in prices. This slump in milk prices is due to the fact that dairy farmers are competing in a global market place and supply is exceeding demand. Plus, there is a Russian ban on imports and a collapse in demand from China for dairy products have played a part in the problem of falling milk prices, industry experts believe.

Arla, the biggest milk supplier in Britain, is to launch a new logo on its milk to show it was responsibility sourced from local farms. Arla is a cooperative owned by more than 13,000 farmers, including 3,000 in the U.K. who are paid from the profit the group makes. In response to the protests this week, the supermarket chain Morrisons will launch a new ‘Milk for Farmers’ brand in its stores, where 10p of the retail price will go directly to farmers. Milk for Farmers will sit alongside Morrisons' own milk brand and is aimed towards shoppers who want to support dairy farmers directly. Consumer research has shown that more than half of consumers would be willing to pay more for cow's milk.

This move by the supermarket follows talks with farming organisations including the National Farmers Union (NFU) as many of Morrison’s branches have been subject to a series of demonstrations in the last two weeks. Milk for Farmers is expected to be in stores in the autumn. The NFU wants all major retailers to be clear and transparent when pricing milk, so shoppers know how much money goes back to farmers.

Sadly, British dairy farmers face tough challenges ahead. Milk price volatility is a new problem that won’t be solved overnight.  Farmers need to develop risk management strategies to deal with the issue. U.K. dairy farming, as in other European Union countries, is likely to become diversified between larger-scale farmers competing on cost and smaller-scale farmers developing premium products sold on short supply chains.

Photo Credit: Wikipedia