NEWS: Another blow for the UK dairy business

Low prices, the recession, and increasing imports of cheap milk combine to hit the already struggling dairy industry. Mark Rowe reports

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The plight of the UK’s beleaguered milk industry has deepened after receivers were called into Dairy Farmers of Britain (DFB), an agricultural cooperative that supplies more than one billion litres of milk a year.
The cooperative, which has 1,800 members, has struggled to pay its member farmers a competitive price for their milk, and recently lost the milk contract for Co-operative supermarkets. DFB also closed its Fole and Portsmouth dairies last year. DFB’s debts total around £100m, including a substantial amount to the HSBC Bank.
Peter Kendall, president of the National Farmers’ Union, which has around 1,000 members in DFB, described the collapse as “a terrible state of affairs”.
DFB supplies about 10% of the UK’s milk and employs about 2,200 people. The business operates dairies in Blayden in the North East, in Lincoln and in Bridgend down in South Wales. It also operates a hard cheese factory in Llandrynog in North Wales and a milk supply business, mainly across the west side of the country where the dairy cows are.
The move to call in the receivers means that all the farmers in the co-operative will lose their entire income for May and the first three days of June.
The co-operative is one of the three large farmers’ co-operatives in the UK and its collapse as been attributed to a range of factors, including the low cost retailers are prepared to pay for milk, the recession, and increasing imports of cheap milk and dairy products.
The receivers, PricewaterhouseCoopers, have arranged to pay for milk production for the next two weeks, while farmers decide whether to leave or remain in the co-operative. More than 900 farmers are believed to be keen to leave the co-operative.
Earlier this year, Countryfile magazine reported on the plight of organic dairy farmers. According to the Organic Milk Suppliers Co-operative (OMSCo), the number of milk farmers converting to organic production has dropped to zero, mainly because conventional milk production is more profitable. That development is likely to lead to a drop in organic production in the medium term because of the time it takes for farmers to convert to organic milk.
This week, OMSCo agreed to collect and market organic milk from those farmers tied to DFB. The number involved is thought to be around 80.
“We have put resources into this unique deal in order to get it finalised quickly and will continue to work very hard to keep milk flowing across the Dairy Farmers of Britain business,” said Stephen Oldfield of PricewaterhouseCoopers.
According to the NFU, the underlying problem is that many British dairy farmers are paid less for their milk than it costs them to produce it. Last week, the NFU and other farming organisations called on retailers and discounters to commit to a transparent and stable pricing mechanism for milk and cheese suppliers that offers producers a sustainable milk price.