Dairy Farmers of Britain

Back in March I posted about some of the problems facing Farmers regarding Milk production in Britain, soon afterwards the BBC picked up the issue. If I were doing this commercially then being ahead of the curve, to use an bit of jargon, that would have been a satisfying feeling. However, while researching the milk industry, I became aware of other problems. But as these were rumours and while other data appeared to confirm that one of the major milk processors was in serious financial trouble, I was not able to get a totally clear factual picture then. Therefore I had to omit part of the story. As fact checking is vital especially when the details could effect people and their livelihoods.

This week the Farmer owned cooperative, owned by nearly two thousand farmers, “Dairy Farmers of Britain” has gone into Administration, the business went bust. While the official receiver may be able to sell the business as a going concern, thousands of Farmers will not get paid for the milk they produced during May or the first two days of June. For many farmers that means a loss of around thirty thousand pounds. As that is turnover, and means that all the costs will still have to be paid out and with many farmers barely breaking even, that loss will be a genuine loss and not just a paper loss.

While I had information that DFoB were in serious trouble, I lacked the hard evidence that could have allowed me to publish. Had I done so and been wrong, I could have damaged the business. Equally had I published and been right about DFoB being on the brink of collapse, I could have been alerting sections of the industry to a serious problem and have enabled some of the Farmers to make other arrangements.

This is where keeping a blog or publishing on the internet does require a high degree of self restraint. While my research had uncovered something that was in the public interest, I lacked the hard evidence to be sure that all my facts were totally accurate. As Dairy Farmers of Britain took ten percent of the total UK milk production, had I cast doubts about the stability of the company, I realised that could have brought on the failure of the business. While as events have now shown that the rumours were true, had I been publishing this for commercial gain, there would have been pressure to publish without the needed verifications.

Therefore I am grateful that I am not bound by commercial needs. While I do have regrets that I was not able to forewarn of Dairy Farmers of Britain going bust, the real issue remains the fact that Farmers are not being paid properly, with the retailers and some processors making the profit and not the Farmers. Dairy farmers are frequently not even being paid the cost of production.

With dairy farming, as the cow has to be fed and cared for no matter what price the farmer is paid for the milk, therefore at the very least farmers must get paid the cost of production. Unlike other forms of commerce, farming uses living creatures. Therefore the commercial gain from keeping those creatures has to be enough to ensure that those animals are well cared for.

Farm animals are not pets, they are there to provide food, but that does not mean that we have the right to mistreat the animals. The current system however means that farmers are frequently forced to reduce welfare standards to keep prices low for the major retailers.

In Britain in the 1920s we introduced a system where the farmers were guaranteed a price for their milk. This took away the power of the retailers and the milk processors to set the price. It stopped the decline of the Dairy Industry then. Without going through the whole history of Dairy Farming in Britain, by the 1990s the Milk Marketing Board was removed and the system that prevailed in the 1920s now exists again.

The problems that were around then, are now even worse now as with a global market in food, retailers can and do buy from any part of the world where the product is cheaper. While bulk fresh milk is not yet a major part of this trade, there is still a million litres of milk from continental Europe bought daily by British retailers. As the Daily liquid milk needs in Britain is over a billion litres per day, that is relatively small, but is the result of farmers leaving milk production.

The effect of Dairy Farmers of Britain going into administration could be that more milk will be imported from the continent. It will not be the liquid milk that will be effected, but the processing in to cheese.

While farmers in Britain can get a premium for their milk if it goes into cheese production, the major supermarkets have been greatly reducing this premium by seeking milk for cheese from other parts of the world while simultaneously increasing the retail price of cheese and their profit margins. Supermarkets make fifty percent profit on cheese. Here in Britain cheese has increased in price by over forty percent in the last couple of years.

It is clear that in Britain that Dairy Farming is in decline as a direct result of the free market. This has resulted in an unfair market where the major retailers, the supermarkets, are putting farmers out of business. While in a free market model this will mean that eventually the farmers that are left will be in strong position, the effect will be much higher retail prices.

The problem is that the Supermarkets are in a price war all trying to claim they are the cheapest, and milk is one of the weapons in this war. Yet the casualties in this war are the farmers not the other supermarkets. The banks tried to make mortgages cheaper by offering even more cheaper credit, and this lead to the collapse of banking, what the supermarkets are doing will lead to the collapse of farming.

When that collapse happens it will lead to sharp spikes in the cost of food at the very least, and may well lead to serious shortages and famine in Western Europe. Food is not like any other commodity, and trade needs to be free and fair. So that the farmer gets paid a fair price, as well as the processor and the retailer, that will lead to prices becoming stable.

Equally Dairy Farming needs to change so that the majority of milk is produced from Grass fed cows and not from imported grain. Scientific tests have shown that grass fed cows produce milk that is more nutritious anyway, and this would greatly reduce the pollution from the slurry of intensive indoor milk systems.

I realise that anything I write here will be ignored by the majority of the industry, and be dismissed as green propaganda by most, but what is happening now are the first stages of a Food Crunch that will be even more devastating than the Credit Crunch.