The first ever UK Agrihive Dairy Summit took place in London this week and aimed to provide a fresh perspective on how to tackle the sector’s current woes.
Dairy farmers need to adopt a business-led strategy and stop relying on unions and protest groups to bring about change in the sector, it was claimed.
Speakers at the Agrihive event gave a blunt assessment of the current issues afflicting UK dairying, with some suggesting challenges such as succession and financial competency were not being adequately dealt with.
William Neville, a director of agri-business at Savills and owner of William Neville Associates, said expecting others to change industry fortunes was the wrong approach.
He said: “A well run business will constantly make good decisions and pull away from a business which relies on [Farmers For Action leader] David Handley or the NFU to provide magical results from time to time.
“Have you got the mindset to take control of your own destiny or are you feeling bewildered and are a victim of circumstance?
“Put simply, the bar has been raised and we need to be taking action to be the best.”
Allan Wilkinson, head of agriculture at HSBC, said the industry had to look to solve problems itself, rather than looking to the state for help.
He added: “Take Dairy Farmers of Britain. It failed not because it was a co-operative but because it had average, at best, management. Being average gets you nowhere.”
"...being average gets you nowhere."
Allan Wilkinson, HSBC
This focus on making tough decisions for the good of a business was explored throughout the day, especially in relation to succession.
During a lively panel debate, south west England dairy farmer Peter Wastenage said succession was an issue which often crippled farming families.
“Succession is a poison chalice for some,” he said. “In New Zealand, sons and daughters buy in to the business which gets rid of sibling rivalry and they are empowered to make decisions which are not inhibited by their parents.
“Being able to cope with succession and having financial education need to be up there alongside the other farm skills we have learnt.”
Steve Ellwood, former head of agriculture at HSBC, said setting aside time to think about the business future of the farm was as crucial as focusing on the livestock.
He said: “I think farm businesses should set aside time to think about the future within the normal working week, not just leave it to a rainy day or dark night.”
Joe Towers, a young farmer from Lancashire, suggested this was an approach many in his age bracket were taking.
“Survival of the fittest will be the biggest variable going forward and it will be the best who succeed,” he claimed.
"...financial education need[s] to be up there alongside the other farm skills..."
Peter Wastenage, dairy farmer
Understanding your cost of production during a period of such market volatility was a message reinforced by several speakers.
Rob Hitch, an agricultural accountant at Dodd and Co who helped organise the event, said there were huge variations in the cost of production, with some operating at 20ppl and some at 40ppl.
Peter Wastenage claimed farmers needed a tight grip on costs, but solutions such as dairy futures were not necessarily a solution to volatility, as some suggested they were.
He said: “To sell on the futures market you need to know your cost of production but people in the UK industry are operating with a set of accounts which are six months out of date, not real time finances.”
But dairy analyst Chris Walkland said UK dairying was creating its own problems as it flooded the market with extra milk.
Between April and October this year, UK farmers produced 732 million litres more milk than 2014, he said, enough to fill an extra 25,000 tankers which could form a queue stretching from Liverpool to London.
He also asked whether the industry faced a ‘morality issue’ as the gap between the ‘princes’ on retail aligned contracts and the ‘paupers’ in the non-aligned pool widened.
He questioned whether it was right to have a situation in which those on aligned contracts continued to get good prices, leading them to produce more milk, while those on non-aligned contracts saw their farmgate price slump precisely because that extra milk was coming on to the market.
A central theme of the event was a discussion about the Kidworth Farm case study.
Aimed at mirroring a typical UK dairy farm facing a tough future, it was drawn up by the Agrihive team.
A competition has been launched to unearth the best ways to take the business forward.
The competition invites farmers and anyone with any idea to enter by taking a look at the case study and filling out a short survey. In doing this, business owners can reflect on their business performance and analyse their own situation and importantly, others can see the issues facing the UK dairy farmer.
There will be four different entry categories for established farmers, young farmers, industry professionals and those from outside farming.
The competition runs until the end of January, 2016. TO ENTER download the full case study PDF document below. Please send your completed comments via email: firstname.lastname@example.org or by post: Robert Craig, Cairnhead Farm, Ainstable, Carlisle, CA4 9RP.
Agrihive is the brainchild of James Walker, a fifth generation grazier from Queensland, Australia.
Attending the London event in person having flown in from Australia just days before, he aims to make Agrihive a global resource which can bring farmers and industry professionals together to tackle some of the industry’s biggest problems.
He said: “I want a global framework which can tackle crises and generate actions. In Australia we have a big issue with financial literacy among farmers and we need to think about how we can overcome that.”
A Nuffield scholar, this put him in to touch with Cumbria dairy farmer Robert Craig who was part of the team which organised Tuesday’s event.
The UK organisers were: