Dairy Crest and First Milk has become the latest British dairy companies to announce a cut in its milk prices paid to farmers from 1st February 2015. The cut by 1.2ppl and 1.6ppl respectively for farmers followed Arla who also said they were going to cut their price.
The UK processing sector is struggling to find added value markets for the extra 1.2 billion litres of milk, equivalent to 43,000 tanker loads, likely to be produced by farms in 2014. The increase in production is unprecedented in any single year.
NFU President Meurig Raymond said: “I feel desperate for those 3,000 dairy farmers supplying Arla who’ve been delivered the worst possible Christmas present. It couldn’t have come at a worse time and this latest reduction will continue to place huge pressure on cash flows for these farmers in the months ahead. It is vital that we don’t see this trend continue through other processors’ February price announcements.
“For the first time producer numbers have dipped under 10,000 with 60 going out of business in November alone. We will continue to put pressure on Government, retailers and the processors with the aim of trying to rebuild an economically sustainable dairy industry. We cannot emphasise enough how awful this downward spiral has been for the dairy industry in the UK.”
NFU dairy board chairman Rob Harrison said: “Today’s announcement from Arla is yet another body blow for the industry and will further devastate dairy’s bottom line.
“But despite this news, dairy farmers across the country, including myself, will continue to provide the nation’s milk – working 52 weeks a year, without a break, and yes, even on Christmas day we’ll be up and in the parlour at 4am before being able to spend some precious time with our children and families.
“All we ask is that the public continues to buy British dairy products over the festive period, including British cheese, look out for the Red Tractor logo and continue to back British farming.”
First Milk Chairman Sir Jim Paice, said: “During meetings which we held across the country in November, we shared our view with members that this market was likely to get rougher before it gets better. Unfortunately prices for core dairy products have softened further since the start of December.
“The rest of the Board and I remain acutely aware of the difficulties that the extreme market volatility is causing our members and dairy farmers around the world.
“We do not know how long this current downturn will last, however our priority is to make the business and our manufacturing assets as secure as possible in order that we can continue to process and market every litre of members’ milk.”
UK farmer confidence falling
Falling farmgate prices and market price volatility have contributed to a drop in farmer confidence, a new survey revealed.
After the last two survey results revealed a largely positive outlook within agriculture, latest results show a marked dip in short term confidence among farmers and growers.
They told the NFU, as part of its fifth annual confidence survey, that they expected negative impacts on their businesses in the coming year relating to regulation and legislation (77%); CAP reform (59%); output prices (56%) and input prices (52%).
Our survey also showed that the proportion of farmers predicting that ‘output prices’ would negatively affect them over the next 12 months has more than doubled in the last year (from 27% in 2013, to 56% in 2014).
NFU President Meurig Raymond said: “This year has seen farmgate prices falling across various commodity sectors – arable, dairy, livestock and mixed - and this increased volatility has clearly impacted on our members’ confidence.
“At the time we spoke to our members, wheat prices were down 30 per cent year-on-year. Similarly, global dairy prices were down 45 per cent all the while during a backdrop of sweeping cuts to the price of milk in this country.
In beef, prices fell to three-year lows earlier this summer while potato prices are 24 per cent lower than they were this time last year.
"With the extent of those price shifts, it’s not surprising that less than one in ten NFU members anticipate improvements in profitability.
“Given this highly volatile marketplace, it is no surprise to see that this has a knock on effect on confidence to invest on-farm, which is crucial in aiding our farmers and growers to produce more food in this country. It sends out clear signals that we as an industry must be given all the support we can to be more resilient during uncertain times.
“Our research does show that, on the whole, farmers remain relatively optimistic about their long-term prospects but no-one should underestimate the challenges that lie ahead in 2015. With an election less than six months away, the NFU and our members have a tremendous opportunity to outline these challenges to policymakers.”
