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Last Updated: Wednesday, 17 November 2004, 00:25 GMT
Will farm exodus see the end of fresh milk?
By Anna Browning
BBC News

The UK is haemorrhaging dairy farmers as they struggle to make ends meet with thousands more expected to sell their herds in 2005. So does this spell the end of fresh milk on our cornflakes and will the Great British cuppa ever be the same again?

Dairy cows grazing
Bigger dairy farms will compromise welfare, say some farmers

A recent report by the Milk Development Council - the public body charged with overseeing dairy farmers - reveals 11% left in 2003 while 30% of those remaining plan to leave in the next two years.

There are now 16,000 dairy farmers left in England and Wales.

Farmers say they are losing money hand over fist because they are not paid enough to cover production costs.

Ask why they are not paid enough and you move into a grey area.

This year a parliamentary committee discovered that while the average litre of milk costs around 50p, roughly 18p of every 50p was unaccounted for - it was simply vanishing in the often-murky supply chain.

Supermarket profits

Other reasons include the strength of sterling, which affects the "lower end" market of unbranded cheddar cheese, condensed milk, milk powder and other dairy products, all of which use 30% of what is produced in the UK.

These products are more often than not sold in euros, with the exchange rate making it hard to compete worldwide - which is turn sets the "tone" of the UK dairy market and brings down the market price of raw milk with it.

But the overriding culprits - for most farmers anyway - are the supermarkets.

The way we buy milk has altered radically over the last decade. When once it was delivered daily by the milkman, now we buy sporadically, more often than not from the supermarkets.

Peter Lundgren
Supermarkets are locked in a price battle but are using farmers as pawns and the countryside as cannon fodder
Peter Lundgren

Indeed, according to the MDC, since the 1994 deregulation with the end of the Milk Marketing Board, the farm gate price has fallen and dairy processors' margins have remained constant, while the supermarkets have increased their profits.

After around five years of crippling prices, it has led to a mass exodus of farmers - and those left have had to expand to survive.

As a result the UK has maintained its quota limit of 14 billion litres a year so far - but there is real worry this might not last.

Consider the reforms of the Common Agricultural Policy due to be implemented next year, and many are feeling shaky about the future.

Tom Hind, milk adviser for the National Farmers' Union, said if they could do some crystal ball-gazing, they would.

But, he argued the supermarkets needed to prove their commitment to British agriculture for a "sustainable future" - while farmers needed to work "co-operatively".

Foreign milk?

He said: "Milk is always going to come from this country, that goes without saying, but farmers, producers and supermarkets must work more co-operatively and get closer to consumers and give them what they want.

"The days of people drinking a pint of milk are over, whereas soft cheese is an area of the marketplace that has grown

Bowl of cornflakes
Fresh milk on our cereal is likely to stay, but there could be shortages

"There should be a positive future provided we get our act together and get it all right."

But Robert Alderson, project co-ordinator for campaigning group Farm is more pessimistic.

He said: "It is quite hard to know what is going to happen, but it's likely more and more milk will come from abroad.

'Food scares'

"We are already seeing an influx of brand milk which has a longer life, so can be brought from abroad and fresh milk is just going to be in the hands of a few processors, which will lead to lots of foods scares and a lack of diversity in the countryside."

The group has launched a Just Milk campaign to bring its message home.

Farm member and ex-dairy farmer Peter Lundgren said there was enough money in milk for everyone to make a profit, but farmers were just not getting their share.

He said: "Supermarkets are screwing the farmers and conning the customers.

"Supermarkets are locked in their own price war with each other but using farmers as pawns and using the countryside and rural communities as cannon fodder."

Asda solution

As for John Sherrell it is already too late. The 27-year-old Devon farmer sold the 40-strong dairy herd his father spent a life-time building up in January.

He is now restructuring the business and selling beef straight to customers in and around his village, Newton Ferrers.

Mr Sherrell said: "It's a lot simpler. The control the supermarkets have got is too much - they are killing the golden goose."

One supermarket, Asda, is finding its own solution to the problem. Since last week it has been using its own 600 farmers who solely supply Asda.

It means, says the supermarket, it can trace not only the milk itself but it can also make sure any price rises are traced right back to farmers.

Tesco also said it was not only committed to sourcing its milk in the UK but had increased the amount it was buying in recent years.

"We recognise we all have to work together," said a spokeswoman.

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