How can consumers help ease the dairy crisis?
- Credit: PA
Every day there seems to be more stories of doom and gloom for dairy farmers – but could consumer power and the humble block of British cheese be the route to salvation for the industry?
Many of us reaching into the fridge for a bottle of milk may not appreciate the turmoil engulfing the industry which produced it.
Global over-supply has sent prices tumbling below the cost of production, putting the nation's dairy farmers out of business at an estimated rate of one a day.
But industry experts say consumers could play their part in a better future, and the saviour of British dairy may not be that cool bottle of milk after all – it could actually be the block of cheese on the shelf above it.
Defra's latest farm business income forecasts show a decline in profits across the majority of agricultural sectors, including a 13pc fall in incomes on dairy farms in 2014/15.
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And it all comes against the backdrop of a supermarket price war. Some retailers are charging £1 for four pints of milk, but this month Asda became the first of the big four supermarkets to match the 89p offered by discount outlets like Aldi, Iceland and Lidl.
But Amanda Ball, a spokesman for levy-funded, not-for-profit organisation DairyCo, said the milk price war – although viewed by farmers as an unwelcome devaluing force on the product's reputation – has become something of a smokescreen for a bigger issue.
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That, she said, is a dairy trade deficit of £1.36bn, which is largely driven by the amount of cheese we import.
'Everybody is talking about the liquid milk and the price war, but the challenges are very serious and real, and they are having a massive impact, depending on what contracts the farmers are on,' she said.
'The way I look at it, we need to give the British public a reason to buy British. Not everyone is patriotic in that way, so we have got to be competitive and produce the right products.
'Our key point of difference is that our products are world-class, and you would recognise that through the Red Tractor logo and the country of origin label beneath it. In the long run, it is in the hands of the shopper – do you pick French brie, or a cheese made in this country with a Red Tractor and a Union Jack on it? If you can create that demand, it will pay off in the long run.'
The number of British dairy holdings has dropped from more than 30,000 in 1995 to 11,500 following the last year of volatility. Pessimistic predictions have suggested that if the current trends continue, there could be just 5,000 within a decade.
'It is a reasonable assumption that unless the public gets an affiliation with competitive products that have come from farms in this country, then those things over the long term could happen,' said Mrs Ball. 'If you imagine what the landscape looked like 20 years ago, the shape of the countryside could change dramatically.'
Of the milk produced in this country, about half is used as liquid milk, and the other goes into processing for products like cheese and butter.
Of that half, about a third of farmers are on dedicated contracts linked to the cost of production, which gives them some protection from the volatility affecting the industry. The other two-thirds are much more exposed to global commodity prices.
Mrs Ball said some farmers have reported a cost of production of 30p-32p per litre – but some on non-protected contracts are selling their milk as low as 25p per litre.
'The reason the majority of prices have fallen is down to global prices,' she said. 'Is there anything we can do about it? To make it really simple, people could say to their supermarkets that they will not change their buying habits if they put the price of milk.
'But it is not just about milk, it is about checking for products which bear the Red Tractor and the country of origin underneath it, so they can make a conscious decision about what they are buying.'
North Norfolk dairy farmer Stephen Temple, who milks 100 cows at Wighton, near Wells, said although his price had fallen by about 10p per litre in the last year, his business had taken efficiencies measures in recent years to insulate itself against volatility.
Firstly, his herd of Holstein cows has been replaced with Brown Swiss, which he said are less labour-intensive and so more cost-effective. Secondly, about half of the milk produced goes into his wife Catherine's business making Mrs Temple's Cheese – adding value, and allowing the couple to set their own product price.
'If we were just producing milk, and still on the 'black and whites' (Holsteins), I would have to give up,' he said. 'With the Brown Swiss cows we are breaking even.
'What we have got to do is invest when things are good to help us through the rough times. We have to get our herds as efficient as possible, and for us, making cheese as well gives us a price that we can set, so we have got a bit of a buffer.'