Coronavirus: Dairy farmers told to understand milk buyers better

Understanding milk buyers and how exposed they are to a particular market is 'important'
Understanding milk buyers and how exposed they are to a particular market is 'important'

Dairy farmers are being urged to understand their milk buyer better as the coronavirus crisis has shone a spotlight on the fragility of the sector.

The Covid-19 pandemic has left many producers evaluating their businesses and assessing the vulnerability of their supply chains.

Looking to help farmers reeling amidst the crisis, a new dairy podcast has highlighted how they could better control their milk price.

The Milk Digest, by the Royal Association of British Dairy Farmers (RABDF), explained that farmers needed to better understand their milk buyer.

RABDF vice chairman Robert Craig said: “Understanding your milk buyer and how exposed they are to a particular market is important.

"Farmers need to look at their business and their own set of skills and ask themselves whether they could cope with a big milk price drop if their primary purchaser was to lose their market."

Farmers needed to evaluate their options and think whether there is anywhere else they could send their milk better suited to their business, he said.

"It’s about farmers really understanding their own skills and the vulnerability and exposure of their milk buyer."

Mr Craig, who farms across three sites in Cumbria and Northumberland, is a director of First Milk.

He noted that the co-operative model had weathered the coronavirus storm better than many largely due to the marketing of milk in different areas.

“The business model at First Milk is working well with a domestic and export focus. Essentially the cooperative is marketing the milk for us," he explained.

Close to 50% of milk in the UK is now sold through a dairy cooperative. "If you look around the world all major milk-producing countries market their milk from a cooperative base.”

RABDF chairman Peter Alvis added that for farmers to take back control of their milk price, better communication was needed throughout the supply chain.

“There needs to be more cooperation between the farmer and processor to manage the volume of milk coming forward.

"There is not a lot of joined up thinking in the marketplace and we need a milk programme in front of us," he said.

Information travelling through the markets would allow farmers to know the implication of putting another 1000-cow dairy up, for example.

"We cannot just keep adding cows and producing more milk and expecting to maintain value,” Mr Alvis warned.

The Milk Digest podcast covers the latest dairy industry news, business, and market matters as well as delving into some of the sector's topical affairs.

In the first episode guest speakers Peter Alvis, Robert Craig, and Neil Rowe discussed how farmers can take back control of their milk price.