Page last updated at 14:26 GMT, Tuesday, 16 June 2009 15:26 UK

Crisis deepens for dairy farmers

by Jeremy Cooke
BBC News

Milk prices are not covering the costs of feeding the cows

It looks beautiful, peaceful, even bucolic. But as farmer Tim Gibson inspects his hundred cow dairy herd in this picturesque corner of North Yorkshire you can tell he is a worried man.

The fact is that Tim's 300 acre farm, which he took over from his dad, is in deep crisis. He is a member of the cooperative Dairy Farmers of Britain which owned the local dairy and guaranteed its members a fair price for their milk.

But earlier this month the cooperative went bust. That prompted a mad scramble from its 1,800 or so members to find new buyers for their milk.

Many succeeded, even if they have signed contracts which may mean they are selling their milk at a slight loss.

We have suffered for many years from having a low milk price.
Dairy farmer Martin Jones

But some 400 farms have failed to find a new buyer. That means their fate is in the hands of the receiver who has been brought in to sort out this mess.

And after weeks of bad news, Tim Gibson and his fellow farmers have received yet more.

The receiver has told them they will be paid just 10p per litre for their milk. It costs the farmer about 27p to produce. The maths are simple and for Tim they don't add up.

"Just imagine what it costs to feed the family pet dog and imagine what it costs to feed a cow every day.

"Ten pence a litre doesn't come anywhere near enough to cover the cost of just feeding these animals and there are hundreds of them on each farm. It is diabolical that we are in this situation."<

Tim's is a modern farm - dairy production, 21st-century style. The cows come into the parlour when they feel like it to be milked by robot.

It is efficient, high-tech, super productive. It all looks good. But the fact is that for years the supermarkets - driven no doubt by their customers - have been squeezing the price of milk.

And so this is a crisis which the industry has seen coming, but could do little to avoid.

That said, many farmers previously with Dairy Farmers of Britain have managed to find other places to sell their milk - even if it is at a slight loss. But some 400 farms are trapped with nowhere else to go.

Clearly it is frustrating for them - especially as they argue there is plenty of demand for the milk they are happy to supply.

Tim Gibson
Tim Gibson has been told he will be paid even less for his milk

Even the receiver brought in to sort out this mess finds it hard to fault that logic. As an accountant, Stephen Oldfield of PricewaterhouseCoopers is left scratching his head: "One of the things that puzzles me is that we actually import liquid milk.

"I find that really bizarre, given that we have got farmers in the UK that can produce British milk for the British consumer."

This is a nationwide problem. Dairies have been shut down in Wales, the East and North East of England hundreds of jobs lost, the milk supply chain fractured. If there is no local dairy, there is nowhere for farmers to send their milk.

Worst affected are the independent family farms which are too small or too isolated to attract the super-sized tankers of the big milk companies

And so in Shropshire 60 year old farmer Martin Jones is contemplating life after a lifetime in dairy.

"We have suffered for many years from having a low milk price. Like every job you don't want to go out on a bad note. But really that is what it feels like at the moment," he says.

In the end of course, this is a question of economics. The price of milk we consumers are prepared to pay at the supermarket has contributed to the fact that there are half as many dairy farmers in the UK as there were ten years ago .

Print Sponsor

Dairy Farmers enters receivership
03 Jun 09 |  Business
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