While milk prices are being reduced by supermarkets, the future of the sector is in jeopardy due to rising energy costs and a labour crisis.
The hardest thing I’ve had to do.” That was the devastating admission made by a dairy farmer in Britain after selling his herd of cows and ending a family-run enterprise that had been in operation for almost 200 years.
What motivated this crucial choice? Despite continuing to pay high electricity, animal feed, and fertilizer expenditures, he experienced a 14p per litre decline in the amount he was receiving for his milk within a short period of time. “I can’t understand why anyone would want to carry it on,” he said.
The milk producer, who wished to remain unnamed, related his tale to Sussex farmer David Exwood, who then posted the comments on Twitter. His circumstance is by no means unusual. Since the start of the war in Ukraine in February, energy costs have skyrocketed, impacting not only the price of fertilizer, which depends on gas for manufacture but also dairy farmers and other food producers.
Last summer’s drought added to financial strains because farmers had to purchase extra livestock feed because there wasn’t enough grass for them to graze on.
Due to milk shortages following the pandemic’s disruption, the wholesale price of milk eventually increased to record levels by late 2022, reaching a high of 51.6p per litre in December. The farmers could now exhale in relief as their expenses were covered. The break, however, was only temporary.
According to official statistics, the average farm-gate price for milk has been declining in recent months, down to 37.6p per litre in May. This was a decline of about 5% in only one month and a drop of nearly 8% from the same month last year.
Farmer and animal feed vendor Paul Rowbottom claims he visits farms in Staffordshire, Derbyshire, and Cheshire daily and observes the effects of financial strains. It’s a nightmare trying to get money in, he claims. Their inability to pay their bills. He claims that the issues dairy farmers and other food producers he serves are facing are the worst he has encountered in his 30 years of employment: “I doubt I’ve ever seen as many people as are right now.
The “spring flush,” which occurs when cows naturally produce more milk as they are released out into fields and causes an oversupply, has been partially blamed for recent drops in the price of milk. However, it is evident that dairy farmers believe they suffer financially when milk processors and retailers lower the price they are paid for their goods.
As supermarkets fight to win over price-conscious customers during the cost of living crisis and a time of persistently high food inflation, they have recently announced price reductions for milk, butter, and bread. The price of a four-pint bottle is currently £1.45 at supermarkets like Tesco and Sainsbury’s, 20p less than it was in early April and the lowest since before the epidemic.
Food companies are now cautioning that the UK’s present liquid milk self-sufficiency may be in jeopardy if dairy farmers continue to leave the country. According to the National Farmers Union (NFU), about 5% of them quit the business last year.
Following the price collapse, The Dorset Dairy Company has become one of the newest farms to opt to sell off its milking cows. The head of operations for the company, Dan Miller, is the third generation of his family to manage a herd in Stalbridge. He now wants to sell their 180 cows in September, after which the business will continue creating its yoghurt, butter, and cream by importing milk from other sources.
Miller claims that the milk price volatility was a factor in his choice, as many dairy producers expanded during the “happy days” of the wholesale highs in late 2022, just as consumers started to cut back on their spending. People are also increasingly adjusting their milk consumption patterns, whether it is by consuming less traditional cups of tea or bowls of breakfast cereal or by consuming more dairy-free options.
Miller thinks that the sector has had a difficult time adapting rapidly enough, with small suppliers being the most exposed. Miller claims that turning off the taps is difficult when using milk. ‘Let’s improve, grow, and make more milk,’ a lot of people stated. We need to have exercised more caution.
“This is an epic cycle and I don’t see it getting better quick enough,” he says, explaining why he is selling his herd. “We don’t know how long this is going to last.”
In the face of mounting financial strain and ongoing labor shortages, farmers throughout the nation are unsure of how long they can hold out. In a recent study, over three-fifths of dairy farmers who are members of Arla, the largest dairy cooperative in the UK, expressed their frustration over a lack of laborers, claiming it was more difficult to find workers than in 2019.
This is something that Warwickshire’s Andrew Hall, a beef and dairy farmer, has also encountered. The two oldest of his four children have already attended college and have chosen against taking over the farm, while other workers “who are my age and older are saying ‘I’m sick of this,’” he says.
“I am finding it tough financially and mentally, and obviously labour is a massive issue,” he says, adding that he is receiving 15p less a litre than in February. “Most dairy farmers are working seven days a week, but it’s 2023, not 1983 or 1973. And we have been left behind with wages.”
The 56-year-old is also going to miss out on his one week-long holiday of the year, as his “relief milking” assistant is recovering from a road accident. “I can’t find anybody else to milk,” he says.
To keep on top of his outgoings, Hall has reduced the amount of feed given to his cows and is scaling down production, relieved that there is more grass available than last summer. “You never hear of farmers striking,” he says. “But we have been taken advantage of for too long.”
Succession problems are among the reasons for a large number of dairy herds coming to market at Kivells, an agriculture and livestock auction house. Mark Davis, an auctioneer based in Exeter, is expecting to sell 1,500 dairy cows over the next month. “We are seeing a lot of sales come forward,” he says. “The milk price and finances are bound to have an effect.”
Davis, who also works part-time on the family dairy farm run by his brother, believes the reluctance of the next generation to take over family businesses is also playing a role. “The sales coming up are generally because of retirement, a couple have been in ill-health, in one the farmer died and the family didn’t want to take it on.”
Some farmers are placing their faith in the government’s intentions to enact new rules in the upcoming months and increase the security of the dairy supply chain. According to the Department for Environment, Food and Rural Affairs (Defra), the so-called dairy code aims to “ensure supply contracts in the dairy sector are fair and transparent, with farmers being paid a fair price for their produce”.
The rules are meant to make it easier for farmers to voice their concerns while also allowing them to contest processors’ price offers and prevent producers from being forcibly changed into new contracts.
Michael Oakes, a dairy farmer in Worcestershire, is hopeful that the plans, expected to become law in the autumn, might “take out some unfair practice from the supply chain”. He believes that the current situation, where farmers sometimes only find out a few days in advance what they will be paid for next month’s milk, is untenable.
Oakes, who is also chair of the NFU’s dairy board, hopes the regulations could “create a new relationship with processors, get rid of the ‘us and them’. We need each other, but it has never felt like a true partnership.”
For now, dairy farmers such as Hall are committed to remaining in farming, even though he admits that he occasionally dreams of a life without caring for a dairy herd. “I could rent out buildings [on the farm] for storage, and have an easier and better lifestyle.”