Milk producers should not be tempted to ramp up production even though prices have broken through the 30ppl mark, writes Tony McDougal.
Michael Oakes, NFU dairy board chairman, urged farmers to take advantage of the higher prices by investing in their businesses, enabling them to become more efficient and resilient rather than add production.
Speaking at the Farmers Guardian/Dairy Farmer Speakers Corner panel event at the Dairy Show at Shepton Mallet on Wednesday, Mr Oakes added that one of the urgent issues that needed addressing was the growing shortage of labour.
He cited one farmer who was thinking of quitting after losing three Polish employees and failing to get any response to concentrated advertising.
He urged the Government to introduce mandatory price reporting to enable farmers to better manage risks and said the current Code of Practice on milk contracts had not stopped some abysmal practices by milk processors: "Some of the B prices that were offered were criminal," he said.
John Allen, managing partner at Kite Consultancy, urged farmers to manage their own risks and said those that had been hit by a very low B price should go and find another processor.
"I agree that the days of being able to chop and change milk processors at will have gone but if you have been shafted with an A and B contract, go and find another processor. There are processors out there who need to be punished."
Mr Allen said one of the major changes in the past 12 months had been the development of the fledgling futures market, seen in Mullet’s new Direct Futures contract, which has been offering farmers 28.5ppl for the year ahead.
Mr Allen expected the futures market to become a mainstay of the UK dairy industry within five years, replicating the current situation in the US.
Responding to questions from the audience calling for the abolition of Basic Payment Scheme support in the dairy sector, he said its days were numbered. Mr Oakes said some support was needed to boost productivity, knowledge transfer, manage volatility and enhance the environment.
David Handley, Farmers for Action chair, said he was still angry that retailers and processors had been allowed to "cripple our industry," adding that the retailers and processors were still withholding 3ppl from producers.
Mr Handley said prices could stay at over 30ppl throughout 2018 if farmers played the right cards. But he urged the industry to step up its marketing and promotional work to attract the consumer of today and tomorrow, adding hat every farmer should be speaking and bringing in dairy products to their local school.