Manage dairy price volatility by 'promoting home produced products'

Current difficulties being faced by dairy farmers were discussed when Sian Davies, NFU Chief Dairy Adviser met with milk producers in Glamorgan recently.

Davies said, “We are in a situation of global over-supply, lack of demand and the Russian ban on all food products in August has compounded the issue. Russia usually imports around 250,000 tonnes of cheese a year from the EU, so the effect of this ban has caused an excess across Europe. It is evident that the current market situation is the same throughout the whole of Europe and the rest of the World.”

NFU Cymru members present expressed their desire to be able to plan ahead but the current price and market situation is making any forecasting for their own businesses extremely difficult.

NFU dairy board chairman Rob Harrison said: “Although the fundamentals of the global supply and demand situation haven't changed this latest price slash is another kick in the teeth and comes at the expense of the average dairy farmer who is now making a significant loss for every litre of milk they produce. There are many farmers that have invested heavily over past years and are now suffering.

“I do understand the market fundamentals but ask this: Why do farmers never get the market highs when global commodity prices are at their highest but suffer more than they should when commodity prices hit the floor?

“While the global market situation remains difficult, we need UK processors and retailers to support our farmers in ensuring a long term sustainable future for domestic milk production.

“The NFU will continue to raise farmer issues with milk buyers, retailers and banks, speak to Government to ease the impact of market volatility for dairy farmers and lobby in Europe to ensure that intervention and PSA are workable tools.”

Chairman of First Milk, Sir Jim Paice MP said the market for dairy products has declined since the start of November.

"In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further," he said.

"During the last few weeks, the Board and myself have met more than 650 producers and their families at large and small meetings around our milkfields. We have been encouraged and humbled by the determination of members that we all work together to get through this current trough."

Sian continued, “As farmers we need to put plans in place to cope with increased price volatility. It is important that there is good communication between farmers and processors so that farmers can understand what factors impact on their milk price. Asking questions and staying in contact is vital.”

NFU Cymru members in Glamorgan gave a strong message that the industry needs to find ways to increase consumption on a domestic level, such as increasing the number of schools partaking in the school milk initiative, where children can learn of the health benefits associated with milk and dairy product consumption.

Sian continued, “The NFU is continuously in discussion with retailers and milk buyers and there are areas where we can all work together on promotion, labelling and public procurement in order to ensure that we get through this difficult period. What we have to do is try to manage price volatility by promoting home produced products more, and we are looking at areas where more effective use of product branding can be used.”