Future of dairy industry at stake

A long-term campaign to highlight the plight of the hard-pressed dairy industry will take centre stage when the Great Milk Debate is launched in London tomorrow.

A long-term campaign to highlight the plight of the hard-pressed dairy industry will take centre stage when the Great Milk Debate is launched in London tomorrow.

Members of Women's Institutes will be taking part in a national discussion involving more than 90 groups over the next fortnight to consider the implications of the disastrous dairy decline.

The National Federation of WIs, which has 250,000 members in England and Wales, has joined forces with the National Farmers' Union to stage the debate.

In the past five years, almost a third of the country's producers have sold their cows and quit the industry. Since April 2000, herd numbers in England and Wales have fallen from 19,000 to under 13,000 by last December and more herds have gone each week since then.

In East Anglia there are fewer than 200 dairy herds - fewer than 80 herds in Norfolk and about 50 in Suffolk.

Tesco's decision earlier this month to pay 850 producers an extra 4p per litre or about 22p without increasing retail prices may represent a turning point. Waitrose pays its 70 producers about 23p per litre as does M&S, but the big supermarkets stand accused of ruthlessly exploiting the dairy industry.

Most Read

Norfolk milk producer William Brigham, regional chairman of the National Farmers' Union's milk board, says the industry has been under relentless price pressure in the past 10 years. As a result, farmers have opted out when faced with years of returns below the cost of production. Today,

What happened was really quite stark - the supermarkets turned a low-margin staple, milk, into a significant profit-earner and literally grabbed all the cream.

Mr Brigham said that in 1995 the retailers' margin was about 1.5p per litre but today it is 16.5p per litre. The farmer and processor's slice of the action has remained static and fallen in real terms to about 18p per litre - to cover all costs of production, delivery, packaging and distribution.

Faced with inevitable rising costs of production, the survivors have responded by increasing herd sizes and spreading costs. Norfolk farmers Ken and Rebecca Proctor, of Grange Farm, Shipdham, have virtually doubled the size of their pedigree Airfield herd of Holsteins to about 300 cows in the past couple of years in a drive to generate a reasonable return. And they are the cream in the national league table producers, certainly in the top 10.

It has required big investment in buildings, parlours and genetics but with an average milk price of just 19.4p per litre - taking into account the latest 1p increase announced a few days ago - it still far short of a long-term sustainable return. The 1p per litre is worth about £30,000 a year for the three million litres produced by their Airfield cows.

Mr Brigham, who farms 700 acres with his brothers at Lyng, near Dereham, is also increasing the size of his herd to about 140 cows.

But these two examples illustrate the scale of the challenge because ironically Britain has the fourth most efficient dairy industry in the world. India leads the world followed by North America and then Australia and New Zealand.

And, this is the real problem because Britain's milk producers get one of the lowest prices in Europe. Dairy consultant Ben Watts, of Kite Consulting, who looks after 70 herds from Norfolk to Sussex, said that Britain lagged at 19th out of the expanded EU 27 in the price league table.