Page last updated at 18:02 GMT, Monday, 15 June 2009 19:02 UK

Uncertain future for dairy farms

By David Gregory
Environment Correspondent, BBC Midlands Today

Dairy farmers face an uncertain future following the collapse of Dairy Farmers of Britain - a co-op that provides a tenth of the UK's milk, 1bn litres each year.

The receiver has just announced farmers in the collapsed co-op will be paid just 20p for a litre of milk.

Dairy farms face a struggle to survive

Gossiping about the rumoured problems faced by Dairy Farmers of Britain has been a popular pastime in farming circles this year.

So when the co-op went into receivership on 3 June it was not a total surprise.

Nevertheless it was still an unpleasant development. For those caught up in the collapse it means job losses, huge amounts of cash disappearing and a bleak future.

For some time Dairy Farmers of Britain had been trying to get back on a financially even keel but the loss of a large supermarket milk contract holed them below the waterline.

The 1,800 farmers who belonged to the co-op have lost a month's worth of milk money which pretty much wipes out any profit this year.

Too small

They have also lost any money they invested in the future of DFoB - sums between £16,000 and £250,000.

Many farmers have tried to get out of their contracts and send their milk to other suppliers.

In the case of the 80 organic dairy farms among the 1,800 it was fairly easy.

Pint of milk
Members of the co-op have seen their profits wiped out

But a core of about 400 farmers remain in the co-op. Many of them are too remote or too small to be attractive as suppliers to other companies or just unlucky to be farming in an area where the existing books are full.

And now the administrator has revealed the best price he can get the remaining 400 farmers is just 20p per litre of milk.

This means farmers will make a loss on every litre they sell. After transport costs and overheads are removed farmers will get just 10p a litre.

On Wednesday there will be a meeting at Defra with the receiver, the NFU and others to discuss what can be done.

This will be followed by a series of surgeries around the country next week which aim to put the remaining farmers in touch with alternative milk buyers.

For many of these farmers selling up and leaving the dairy business is an attractive option.

While milk is cheap dairy cows themselves are not.

So many are being slaughtered to try and irradicate bovine tuberculosis there is a shortage which has pushed the price up.

Shoppers are likely to see more imports of dairy products - meaning cheese on sale in the UK may in the future come from South America rather than cows grazing in a Midlands field.

Print Sponsor

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03 Jun 09 |  Business
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