United Kingdom-The dairy crisis.
UNITED KINGDOM-DAIRY FARMING.
MUCH of the countryside would appreciate a decent shower of warm rain following one of the driest springs for years, but dairy farmers are finding their umbrellas are ineffectual against a deluge of milk price reductions that show every indication of draining their bank accounts deep into the red.
Bad news comes in torrents and the latest announcement by First Milk, the farmer-owned business with over 2,500 members in Scotland, England and Wales, that it is to impose an immediate ex-farm price cut of 1p per litre will only add to the agony of
many dairy farmers who are just about hanging on in the face of higher production costs and weak international commodity markets.
Peter Humphreys, the chief executive of First Milk, has done his best to secure higher returns for producers, but conceded that the market situation remains testing in the extreme.
He said: "The liquid market, where we put around 60 per cent of our volume, has seen further price drops. In addition, cheese selling prices continue to be under pressure from imports and the increased volume of branded promotions.
"However, we are starting to see some positive signs. Firstly, global ingredient prices have stabilised. Secondly, our cheese brands are gaining listings and delivering volume growth.
"I can assure our members that we are urgently reviewing our entire cost base and sales streams to establish a clear route to improve the returns we can pass back down the chain."
The cynical dairy farmer may regard those comments as little more than platitudes at a time when even the most efficient producers – Scotland has the largest average herd size in the EU – struggle to pay their way, but the longer-term prospects may yet prove to be enticing once the current global economic crisis is resolved. The bottom line is that there is a growing demand for dairy products. But patience is fast evaporating.
Allan Bowie, vice-president on NFU Scotland, is well aware of the mood of the remaining 1,300 or so farmers who still milk cows in Scotland.
He said: "This latest announcement completes four months of misery in Scotland during 2009 when every major milk buyer has cut its price by between 10 and 20 per cent.
"In March, the independent consultant Promar estimated that the cost of producing milk on the farm was around 27p per litre. There will now be no dairy farmers in Scotland receiving that kind of price.
"Producer confidence is already low with one in eight dairy farmers indicating in a recent survey they are likely to leave the sector in the next two
