Monday 10 August 2015

A short history of dairy farming or Why UK dairy farmers are up shit creek without a paddle and history might offer a partial solution to the crisis

Marx told you this would happen!
History for the dairy farming sector began in 1933. Up to then dairy farms were many and small their product a perishable liquid, heavy and difficult to transport, they were exploited by the large and powerful dairy processing companies.

Dairy farmers and their families lived on, " the smell of an oily rag" according to John Cherrington farmer, writer and TV broadcaster.

The UK government's solution  was to set up producer marketing organisations, Milk Marketing Boards. Their aim was to preserve and increase farm incomes and to protect them from the inherent economic weakness of agriculture...... a huge number of small producers selling a bulk commodity to a small number of buyers.

For 60 years the milk boards provided a reliable service. Tankers arrived daily to collect the milk then the milk cheque arrived promptly every month. To some extent farmers traded short term profit opportunities for long term stability and it worked well.  The dairy farm I spent my time on as a child in the 50 s had 12 cows and managed to support three families. Dairying prospered under the aegis of the MMBs. In the early 70 s when I started work as an agricultural advisor in SW Scotland farmers worried about their calving index ,silage quality and mastitis cell count, all technical stuff. The milk price was rarely mentioned, it was OK.

In the 70 s and 80 s when I was managing dairy farms myself; production per cow had more than doubled in 30 years and the EU had a surplus to deal with by intervention buying. There was talk of milk quotas coming and they would be based on historical milk sales. My solution was to milk 3 time as a day, production went up by about 15 per cent then we had milk quotas imposed in 1984 ours was quite large. We relaxed  and went back to twice a day milking the quota wasn't a problem.... things were still OK.

The MMB business model, "command and control" didn't fit with Thatcherite ideology of the 90s so they were abolished.  A free market would encourage competition and increase efficiency. In short it would solve all problems . Farmers and their unions being inherently conservative with big and small c went along with it. There was talk of turkeys voting for Christmas in some quarters

 Once quotas were removed in 2004 the production potential of European dairying took off in the belief that an expanding global market could absorb the extra supplies. The global market soon became over supplied then Russian sanctions against EU dairy products made matters worse. The Russians have suffered too, they have to eat Russian cheese.

Supermarkets are blamed for using milk as a "loss leader" and subsequent low farm gate milk price; its part of the problem but not the whole story. Those farmers who are carrying out direct action are in danger of alienating the supermarket's customers. Meanwhile the farming unions want the EU to intervene, there's a fat chance of that happening! The main problem is that we are in a global market for milk and there is global over supply depressing the milk price throughout Europe.

*There were 9,724 dairy farmers in the UK at the start of this month (August 2015) in August 2004 there were 15,500 a fall of 38 % in eleven years. That means that at farm level there are 9724 different business management decisions to be made about the problem of low milk price. You can't generalise about farm businesses, they are all unique

 The decision to give up milk production is hard but it obviously sounds sensible in many cases.. Some of those who have stayed have decided to add value and to deal with the consumer directly as producer retailers or by making cheese and ice cream.  A few like the current arch villain in The Archers (Rob) are setting up mega dairies to achieve economies of scale and annoy their neighbours.

No one has yet suggested bringing back the Milk Marketing Boards but they could be part of the solution.

Dairy farmers  did well under the MMBs, the old kindly, condescending , land owning Tories and a Labour Party which treated them as hardy, yeoman sons of toil.  Perhaps they should look to Jeremy Corbyn for an answer reversing the political ideology of the past 30 years.

* Source: data/producer- numbers/

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