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Potter's View: Continuing to ride roughshod over producers

This month Ian Potter reflects on the deep anger felt among some producers following the devastating treatment in the Covid-19 shutdown and examines the ongoing damage it has done to long-term relationships.

Last month’s article, with one memorable exception, was easily the most positively commented article in almost 30 years of writing this column. So thank you to all who took the time to respond.

 

Most of the comments were identical in tone, and along the lines of: “Most of us have been treated like rubbish over recent months and we are sick to the back teeth of it. When you challenge your milk buyer, you get told to back off or you will be looking for a new buyer. It stinks and, if we treated our staff the same way, we would be hauled before the courts.”

 

Another wrote: “My optimism for the future of dairying is depleting daily. We are being treated as a failing charity case. When will the serious impact of not receiving a fair price for our milk compared to our costs be recognised?”

 

Others regrettably but understandably said: “We have had enough, the cows are going or have gone.”

 

One or two milk processors will have a Covid-19 hangover for several months, with some farmers ditching them at short notice on the basis their milk purchaser breached its producer contract multiple times. Certainly some purchasers’ gob-smacking knee-jerk response to the Covid-19 market turmoil should leave long-lasting impressions with farmers, to the point that if one said, one day, that it was a Tuesday, I would have to double-check the calendar.

 

Short-term plans

 

The hardest hit farmers have undoubtedly been those supplying purchasers with not enough eggs in one basket, with no brands, no presence outside the UK, and a very short-term plan of effectively hoping all the roses in their garden will be in bloom all the time.

 

A minority of farmers remain naively convinced that Government-imposed changes to written contracts would have prevented those adverse situations arising. Now while I agree every dairy farm should have a solid, transparent contract (for example, covering minimum price change notification requirements, a fair notice period to both parties and a clear pricing schedule/matrix with payment terms), I do not think any of this would have helped during the pandemic.

 

Most of the badly affected, but honourable, processors had no home for the milk, and I do not think contract legislation would have helped here. As for the dishonourable ones, well they just make the rules up as it suits them and are convinced they can escape conviction. I think they will continue to ride roughshod over producers, whatever laws are in place.


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Trust

 

One farmer asked me whether he should trust his milk buyer. My response was ‘do you trust him to hold onto your milk money for a standard four weeks and up to eight weeks, or does that worry you?’ His answer was that it’s a constant worry.

 

It is not easy to predict the shape of the industry at farm or processor level once normality returns, but fewer will emerge on the other side. Consolidation will gather pace, as only the most efficient and financially stable processors and farmers will thrive and be profitable.

 

I recently had an enquiry from a dairy farmer in Staffordshire whose milk was contracted to a London processor. He was desperately seeking a new processor and could not understand why two processors, who were much closer to his farm than London, had informed him his pick-up was too far away.

 

Over a year ago in this article I stated that if your processor is hauling your milk more than 100 miles then it is not sustainable long-term, and also suggested you take steps to find a more local processor or run the risk you will be given notice that your milk is no longer required.

 

I asked the farmer concerned what prompted him to sell his milk to a processor so far away. His answer was ‘they were paying 0.5ppl more than the others, and a local man organised for a group of us to move to them at fairly short notice’. How often have we heard this in the industry over the years? The folly of chasing the extra 0.5p. His best option now could be to sell the cows.

 

As to the future, I have been invited to a meeting with three others to explore an alternative for those non-aligned farmers who supply the hardest hit processors and brokers. It won’t help this time, but in my opinion the main stumbling block will potentially be farmers’ inherent unwillingness to co-operate and come together.

 

I subscribe to the motto that you need to fix the roof while the sun shines and that is what two of those involved are striving to do. I hope I can help them succeed with their plan.

 

Now the environment. A recent Guardian newspaper article highlighted the jaw-dropping fact (well it was presented as a fact anyway) that 13 global dairy processors and their farmers have the combined greenhouse gas emissions as the entire UK. This further fuelled loud calls for the world to cut its dairy consumption in a bid to tackle a climate change emergency. Never mind actually keeping people fed.

 

To date I have taken a limited passing interest in climate change demands, but I accept the industry is accountable for its emissions and needs to minimise its environmental footprint.

 

The environment and methane emissions from cows are a real public concern and influencing consumers’ choices. Plant-based alternatives are capitalising on their lower carbon emission credentials, and numerous independent reports claim eliminating dairy and meat is the biggest move a consumer can make to reduce their environmental impact.

 

The Guardian article does not criticise the farmers, in fact it sympathises with the unfortunate badge that farmers are the bad guys, and believes farmers are the solution to the problem.

 

Now don’t assume this next comment is a Potter ploy applicable to the famous Italian Job soundtrack ‘This is the self-preservation society’. It isn’t. But The Guardian reporter highlights one very popular solution is to introduce supply management (aka quotas). This would kill two birds with one stone, he says, for example limiting/preventing overproduction, balancing supply and demand and stabilising milk prices. Simple, he says, produce less and earn more.

 

Milk is too cheap

 

Yes, you have seen it and heard it all before, but milk is too cheap and The Guardian lays the blame at decades of Government policy targeted at making food cheap with ‘the true cost of that [policy] simply passed down the line to dairy farmers’.

 

The UK has the third cheapest basket of food in the developed world, but the highest food poverty in Europe.

 

That model is failing. Yet most consumers appear to support the dairy farmers’ plight and expect all involved to treat them fairly and with respect.

 

Will Brexit, coupled with the unplanned environmental benefits claimed from Covid-19, result in a rethink and a once-in-a-50-year opportunity for food and farming? I certainly hope so.

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