‘Urgent Government action’ needed to protect dairy sector from irreversible damage, warns farming unions

But it is feared capacity will already be under severe pressure as it handles spring flush volumes, alongside concerns about the timings of the implementation of the legislation and how it will be applied fairly across the industry.

Dairy market analyst Chris Walkland said: “While industry will welcome the progress which they have lobbied hard for, it has come much too late.

"The reality is more than 550 dairy farmers need help now, with price cuts and delayed payments severely impacting their farming businesses, and Defra’s plan will simply not help them solve these cashflow problems in the immediate future.”

Further action required

Farming groups have written again to Defra Secretary George Eustice seeking swift action to help stabilise the market.

The letter, sent by UK farming unions, the Royal Association of British Dairy Farmers (RABDF), Dairy UK and the Provision Trade Federation, called for a targeted grant scheme for affected farmers similar to the Retail and Hospital Grant scheme; a Government run production reduction scheme to compensate producers for cutting milk output to effectively furlough dairy cow; and greater availability of private storage measures through engagement with the EU commission.

The letter said: “There are farmers unable to pay their feed companies and having to sell cows. There are dairy companies that, having lost all of their key markets, still have to deal with the milk and find a home for it in an oversupplied marketplace.

“Already around a quarter of the dairy industry has been affected within just a matter of weeks. We need action now, as well as a more considered response for the medium and longer-term measures, to ensure the long-term sustainability of the UK dairy sector.”

Curbing output

To help curb output, the NFU has proposed a reduction scheme to take out 20m litres per week for a 12-week period at potentially 15ppl, but has reached a stumbling block with the Treasury.

NFU dairy board chairman Michael Oakes said: “It is vital we find a solution and get this scheme in place.

“We will be pushing really hard every single hour of every day to get them to change their view on that.

“The processors I have spoken to say there would not be enough capacity and that will lead to more milk being dumped and the farmers will have the costs of producing it and have to stand the loss.”

He thought the support cost ‘would be a small price to pay to get the industry out the other side of this’.

“It will be exceptionally tough and there will be very, very few dairy farmers not adversely affected by this in the next few months,” he added.