Cows on the hill

The Milk Crisis

Cows in Asda and tractors blocking roads. They’ve almost become a regular feature on local and national news and although the emphasis may be on milk, poor prices for fresh produce mean smaller farmers are struggling to keep their businesses financially viable. However, with some applications for more efficient “super-farms” being rejected in the UK, is the government failing to understand the ever-changing face of British agriculture?

The primary reason for why farmers are now stuck in a precarious situation is relatively simple: increased global production in products such as milk coupled with unchanging (and sometimes falling) demand means that the amount farmers are able to sell their produce for continues to fall because any farmer who decides not to sell for a certain price will soon find their selling prospects severely limited.

Continuing with the milky example, the removal of quotas for dairy production in Europe has resulted in the supply of milk outstripping demand; British farmers have no choice but to accept a lower price (potentially around 24p a litre). With it costing around 28-32p a litre to produce milk, it is easy to see why farmers are losing out.

So-called “super dairies” are able to survive these price drops because mass production efficiency is enough to keep running costs down and a small profit achievable. The farmers that lose out are those on small to medium sized farms. Here, it has recently become increasingly difficult to make any sort of profit, even with the subsidies provided by the EU.

So who, if anyone, can be blamed for farmers being forced to close shop and leave a profession they probably grew up with? Well one target the media have attacked is the supermarkets, with a spotlight now on how much they pay British farmers.

Most farmers will sell to a dairy processor who will, in turn, sell on to the supermarkets. Therefore, these processors are the ones who pay the farmer directly, but the amount they pay will depend largely on the price paid by the supermarket. Due to commercial confidentiality laws, we do not know the price or profit supermarkets make, but the falling price of milk in the supermarket “price wars” suggests that amount they pay is also falling.

Some of the big supermarkets – including Tesco, Sainsbury’s and the Co-op – have schemes in place to make sure farmers are paid an acceptable price to make a living. But others, in particular discount chains Lidl, Aldi and Asda have been slow to put these securities in place with new minimum prices of 26-28p only just being adopted. Morrisons, meanwhile, has given the consumer the choice with a new brand which gives more money back to the farmer. However, these prices are still below what it costs most to produce the milk…

The dairy crisis has only seen action because of the intensive media attention. So what about the other areas of farming?

Lairg in Northern Scotland has traditionally held “Europe’s largest one-day lamb sale” but the number of lambs being sold is falling, rapidly. 13,000 were sold this year but already, the price was around £4 per head lower than last year. To put that into context, a farmer selling around 300 lambs at this sale would make around £1,200 less than the year before. In other sales around that country, the picture is even more dismal with prices down as much as 20% on the previous year.

Recently, a lot more has been done to help livestock farmers with Morrisons and Aldi being praised for their focus on British produce. Meanwhile, the National Farmers Union (NFU) have used a number of promotions to improve the image of British produce. Last year, the Scottish branch worked with Quality Meat Scotland (QMS) on the “Wham, Bam Thank You Lamb” campaign which saw Scotch lamb sales rise by 11%.

But despite the apparent success in this area, 2015 looks set to be a dismal year for most farmers. Outdoor livestock producers are all already seeing lower prices in the early summer sales and the terrible weather has seen some resort to moving cattle herds indoors, something not usually done until November. All this does is increase costs and reduce any profit further down the line.

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Arable producers sadly do not escape either. Last year saw record yields being recorded by some farms, but this year delayed harvests will only put further pressure on those who need to quickly turn to the planting of winter crops in September/October. To give you an idea of the delay, my family farm started combining on 24 July last year. We are only just about to get started now on the 2015 harvest.

But the problem is not only affecting those in the UK. The French, always up for a protest, are also getting involved, asking their government for a €600 million package to help dairy farmers. In the UK we take cows into supermarkets and buy milk to later hand out for free; in France farmers have blockaded cities with tractors, released pigs in supermarkets and have even used a straw chopper to cover tourists in the south.

Nonetheless, their objectives are the same as British farmers: to raise awareness for the small farms who are losing out to those who can afford to sell at a lower price.

Is this something governments need to control or is it simply how modern agriculture is evolving?

One of the reasons for an influx of workers to help fuel the industrial revolution in the UK in the 18th and 19th centuries was because machinery was now taking the place of people and agriculture became far more efficient than before. The industry is now at a crossroads: we can either focus on these incredibly efficient super farms where more can be produced quicker, more easily and cheaper than ever before or we can stick with what we have, where born and bred farmers don’t have to go looking for alternative employment opportunities.

This is a question that requires more than a couple of hundred words in an article to answer, but it is one that governments in Europe and beyond need to consider. The USA has recently seen a dramatic rise in the number of mega-farms opening, but in Europe this phenomenon is yet to really kick off. Some planning applications have been rejected simply because of the sheer scale of the projects, although the number of super-sized farms operating in the UK is on the rise.

As for the current pricing issues, a balance is needed: there is an excess amount of milk being produced when demand is limited, yet the government and the supermarkets need to make sure that they keep dairy farmers onside, otherwise the supply of British milk in the future may become limited. Whether this is done through minimum price levels or subsidies can be discussed, but right now any extra help is desperately required.

Nonetheless, the government and the supermarkets cannot take all the blame; the consumer must also get involved. Our desire for cheap goods has only fuelled the supermarket price wars with retail values tumbling in an attempt to lure more consumers in. Of course, for some, the cheap prices must be taken advantage of due to the ever-increasing cost of living, something we all understand. Yet with these supermarkets now offering produce from all corners of the planet, it seems that for so long British items have been rejected in favour of a slightly cheaper alternative that has flown in from the other side of the world. If consumers made the conscious decision to “buy British” wherever possible, demand would rise and the price farmers are paid would increase too.

Evolution of agriculture continues and should not be halted, but to continue enjoying the best that British farmers can offer, you have to actually pick up that pint of milk or shoulder of lamb, place it in your basket and pay safe in the knowledge that you are helping to support an industry facing a difficult and complex future.

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Ruairidh Campbell
Based in the Scottish Borders/Glasgow, Ruairidh has written extensively on everything from rugby to politics with work published in publications including the Scottish Rugby Union's website, Scottish Field Magazine and Edinburgh Rugby's match-day programmes.
Ruairidh Campbell

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