With consumers asking more questions than ever before about where their food comes from, Alex Black and Howard Walsh take a look at how this was affecting the dairy markets.
Processors are looking to drive up standards as they look to respond to consumer demand and secure their supply chain for the future.
Two processors now dominate the UK milk market, with Arla and Muller both collecting milk from about 25 per cent of British farms.
Arla is the largest on volume, collecting 3.8 billion litres, with Muller just behind, having completed the task of incorporating Dairy Crest’s dairies business, now collecting more than 3bn litres.
While they are very different businesses, both face the same challenges of demands for higher standards and provenance.
The fate of bull calves has been at the centre of the debate on standards, with animal rights campaigners and vegan groups using the shooting of calves at birth as a major platform for their viewpoint.
Major retailers, whichever processor they are supplied by, have for ten years or more been rewarding those producers lucky enough to be on the various aligned contracts, with a premium for complying with their on-farm standards.
And Arla has now announced a well-publicised new initiative, Arla UK360, which was being rolled out as what it perceives the marketplace demands. However, it did need retailer and foodservice support to succeed, with Aldi the first to sign up.
It offers a premium to farmers in return for meeting the standards, above and beyond its Arla Gaarden assurance scheme, which it already claimed surpassed Red Tractor.
Muller currently requires producers to comply with the Red Tractor Assured Dairy Scheme standards which the company highlighted covered all aspects of dairy farming and milk production, with standards for calf welfare and youngstock and livestock transport.
Its retailer aligned producers have to adhere to supermarket-driven standards, but it would not be surprising to see Muller push forward in this area, with welfare also on its agenda.
But it is not just about welfare. Muller was keen to secure its milk supply for the future, launching new schemes to try and combat volatility.
The launch of its Muller Direct Next Generation scheme saw the company working with an initial 25 young farmers over a three-year period, providing them with bespoke training on issues such as benchmarking and market analysis.
It followed the launch of Muller Farm Insight and the Muller Direct Futures Contract option in 2017. And following confirmation of the firm becoming Lidl’s main milk supplier, its direct farmers could secure up to half of their milk supply at 28ppl fixed price for up to three years.
Meadow Foods has also recently launched a new Young Farmers Programme, designed to give young people the key business skills and industry knowledge
required to succeed in dairy.
The programme was split into two parts, on the job training and the opportunity to be sponsored for an on-farm or dairy industry related project.
It has also introduced a fixed forward pricing scheme of 28ppl for a 24-month period from July 1 2018, although this was only around 3 per cent of farmers’ volume with hopes other customers would take up the option.
But as processors look to up their game, the Free Range Dairy Network has urged small farms to take ownership of its Pasture Promise logo, making sure it belonged to farmers not ‘unscrupulous’ buyers.
It accused some processors of simply adding free range to products without upping standards.
Founder Neil Darwent said the label had been created to add value for small, family farms generally labelled as conventional or standard milk.
But with the organic sector asserting ‘all organic cows are free range’ and well-known brands simply adding the term overnight, Mr Darwent was frustrated, questioning if this assertion was true.