The chairman of Dairy UK has urged Defra to ’step up to the plate’ after revealing the vote to leave the EU is set to cost the UK dairy industry millions of pounds in EU promotional funding.
Brexit will cost the UK dairy industry millions of pounds in promotional funding, according to Dairy UK chairman David Dobbin, who has urged Defra to ’step up to the plate’ to fill in any funding gaps.
Dairy UK and AHDB Dairy have been working together for some time on a jointly funded dairy promotional campaign, central to which was an application for EU promotional funds to supplement their contributions.
The EU element is now gone, Dr Dobbin told the Dairy UK dinner in London on Wednesday, before urging Farming Minister George Eustice, who had just outlined his views on Brexit, to ensure the UK dairy industry is not disadvantaged by the vote to leave the EU.
Directing his comments to Mr Eustice, he said the vote to leave the EU could have ’significant implications’ for the dairy sector.
He said: “Minister, over the years this industry has benefited from EU funding to promote agricultural products.
“We were delighted when earlier this year AHDB leant their financial support, along with ours, to promote British products and to look how we could develop opportunities for British dairy, not just in the UK but abroad.
“Dairy UK, the Dairy Council and AHDB Dairy were able to lever EU support for our campaigns.
“But now we are no longer going to be a member of the EU we will lose significant funding for promotion and I hope Defra steps up to the plate and I hope the promises we heard tonight (from Mr Eustice) and the promises we heard during the campaign are honoured.”
Dairy UK and AHDB Dairy have already held discussion about the options available to them to ensure the promotional campaign is not derailed by the Brexit vote.
Dr Dobbin called on the UK and devolved Governments to provide ‘unconditional support for the dairy industry’ reflecting its contribution in terms of jobs, investment and the provision of a wide range of nutritious foods.
“In the wake of a momentous event in UK modern history, more than ever before do we need to ensure that the UK dairy industry is market led and innovative.
"We also need to ensure it is internationally competitive and best in class - and most important of all, that it is open for business wherever that business takes us,” he told leading figures from across the dairy sector gathered in London.
“It is essential that we promote British dairy products at home and abroad with all the help we can get from Government.
"If we are going to go it alone and successfully compete in the global market, then we need a level playing field.
“We don’t want hand-outs but we need support and we need help to compete with our European competitors, with all the subsidies and support we currently enjoy when ewe leave. We have got to compete to survive."
He blamed the prolonged downturn in the dairy market on global over-supply and the end of EU milk quotas, which prevented EU producers responding to lower prices by cutting production.
But said he hoped lessons of the past two years had been learned. With demand for dairy rising at just 2 per cent a year, the industry must ’plan our output rather than just mindlessly producing’.
That means ’producing for customers, hopefully added value products which have sustainable markets’, he said.
Looking ahead, he added: "Thankfully we are starting to see signs the markets are stabilising, with milk production in Europe slowing and the ongoing intervention of milk powders tightening the market."
"We are now past the northern European peak milk production period and with British milk production falling year-on-year and seasonally we are starting to see encouraging signs.
Farmgate prices we hope have it the bottom.
"It is too early, however, to call it a market recovery. There are still significant amounts of stocks held in private and public hands and while milk production is slowing global milk output is still running at an historic high."
In a direct message to those in attendance, he said his overriding message was the need for ’decisive leadership’ from politicians and industry figures to help the sector get through these uncertain times.
Speaking before Dr Dobbin, Mr Eustice sought to reassure the industry about the implications of Brexit, insisting despite the nervousness it has caused since, it was the 'right decision for the industry'.
He claimed the vote would have been much more decisive if people had not felt so nervous about the prospect of such a fundamental change ahead of the vote.
He said the UK dairy industry was 'enormously important' to the Government.
He added: That’s why we are pursuing a host of measures to help our dairy farmers deal with ongoing price volatility, including backing a dairy futures market and extending tax averaging, so they are well placed to take advantage of the growing global demand for dairy produce.
“Following Friday’s vote to leave the EU, we are now preparing to negotiate our exit.
"As the PM has made clear, there will be no immediate changes - until we leave the EU, current arrangements for farming and our environment remain in place.
“We clearly need to support our agriculture and rural communities - and British farming must remain profitable and competitive.
"Defra officials will be working with a dedicated unit in government to look at a future package for farmers and the environment. We will work with industry and the public to develop these new arrangements.”
He also welcomed signs of a much-needed turn around in the dairy market.