Developing a brand for Jersey Dairy products is based on a history of quality, traceability and the high health status of cows. Angela Calvert reports.
Jersey cows are renowned for the quality of their milk and there is nowhere this is more important than on their island home. Here, the drive to increase exports aims to provide a more sustainable future for dairy farmers, by allowing farm businesses to grow.
About 10.5 million litres of milk is required annually for the home market, but with production currently at 14m litres and rising, exports are key to sustainability and growth.
Recent studies by Kite Consulting show there is the potential for production to increase to 17m by 2020, of which 6.5m litres would be available for export.
There are 23 dairy herds on the island and all bar one supply their milk to the Jersey Milk Marketing Board (JMMB) which has its own processing company, Jersey Dairy.
This has strict rules of supply which not only safeguard the quality of the milk, but provide it with a unique selling point to market its high value range of dairy products. As well as milk, this range includes butter, cream, yoghurt and ice cream.
Bob Jones, marketing director for Jersey Dairy, explains the company’s export strategy.
He says: “Historically, the UK had been one of our main markets, initially for UHT minipots for food service, and more recently for retail packs of butter and cream.
“Today, we still supply Marks & Spencer with Jersey Butter and supply a network of wholesale customers with up to 2m litres of UHT soft-mix ice cream, milk shake and yoghurt mix.
“All our decisions have to be market-led. In the UK, we are seeing milk increasingly used as a weapon in supermarket price wars.
This, combined with the emergence of discounters, means we do not see the UK as a market we should be prioritising.
“Therefore, we have made the decision to focus on the Asian market, which we believe we can develop quickly.
“We have a unique story to tell based on traceability, safety, taste and quality.
“The breed has been protected in Jersey since 1763 and the herd book was established in 1866, so we have developed branding depicting our 250-year history.
“The main export product is UHT whole milk, which at 4.3 per cent butterfat is higher than milk from New Zealand and Australia.
“It has a shelf life of nine months and only requires ambient temperatures. Our milk is also naturally high in calcium.
“We started with Hong Kong, as authorities there work faster than in Beijing, although we hope to get clearance for China in the near future. The first shipment went in November 2013 in time to be on sale for the 2014 Chinese New Year.
“The logistical costs of getting to market mean it is as expensive to get freight to the Midlands and north of England as it is to the Far East. Plus, their buyers are easier to deal with than some of those in the UK and we are able to develop good relationships with them.”
Mr Jones says buyers from the Far East are good at promoting products at no charge and they give it premium shelf space.
Feedback from international customers sharpens marketing, he says.
“We are operating in a niche market and cannot compete on price, so we have to market our point of difference and need a good premium in every market.
“Exports are growing steadily and, in the last two years, we have increased the volume of milk required from farmers by 1.5m litres.”
Farmers are currently paid 46.5ppl for their milk, subject to penalties and bonuses.
Mr Jones says: “If you want a sustainable industry and for farmers to be able to reinvest in their businesses, they must be paid a fair price and it must be open and transparent. Kite Consulting is used for farm costings and training and a farm secretary is employed to assist farmers.”
A quota system is in operation, but farmers are not able to buy quota. They have to apply for it and be interviewed by an independent panel, says JMMB chairman Andrew Le Gallais.
He adds: “Any increase in milk production has to be market-driven and for the industry to be sustainable, we need to ensure we have a long-term supply of milk to the dairy. Therefore, before farmers are allocated more quota, they have to fulfil certain criteria.
“This includes demonstrating the ability to produce more milk, a record of quality milk supply, investment in the farm and having a succession plan in place.”
Undoubtedly, one of the key marketing points for Jersey Dairy products, livestock and genetics, is the high health status of cattle on the island.
This is as a result of its location and the fact there have been no cattle imported for more than 200 years.
Farmers and the authorities have worked hard to take advantage of this and make sure it is maintained.
Mr Le Gallais says: “It is all about marketing milk and how we differentiate ourselves. Our high health status is a big part of this.
“Branding starts on-farm. Our image is of brown cows in green fields and the quality, traceability and safety of our dairy products.
“Every one of our milk producers has signed up to the Cattle Health Certification Standards [CHeCS], showing commitment and determination to safeguard our future. One of the advantages of being a small island community is we can all work together to our advantage.”
As part of the CHeCS scheme, all cattle on the island have been declared free of BVD, IBR and leptospirosis. There is a low incidence of Johne’s disease and all milking cows are screened annually with the aim of eventual eradication.
There has never been a case of bTB in Jersey in living memory, and an application for TB-free status has been applied for, but to achieve this, a testing programme has to be undertaken.
There are 5,000 Jersey cattle on the island, about 3,000 of which are in-milk, plus a small population of Aberdeen-Angus cross Jersey cross terminal beef cattle reared for the local beef market. Herd size ranges from five- to 260-head, with an average yield of about 5,000 litres.
To comply with the rules of supply for Jersey Dairy, herds have to be pedigree and registered in the herd book, milk-recorded, grazed outside for at least six months of the year, be Red Tractor farm assurance-accredited and milk must be processed within hours.
Production costs are high, due to the need to import straw and concentrate feed, and dairy farmers have to compete for land with potato growers who make up the island’s other major agricultural sector. They are often involved in land swaps to rotate potatoes, grass and maize and may have numerous landlords, which increases bureaucracy.
One of the most important developments to the industry in recent years was the change in legislation in 2008, allowing the importation of genetics.
David Hambrook, general manager of Jersey Island Genetics, says: “This change was needed for us to improve the quality of cattle on the island and help our dairy farmers increase profitability, but it is closely monitored and every batch of semen is DNA tested.
“We have a good relationship with UK semen companies and work closely with them to identify and put together a portfolio of bulls which are likely to be suitable for our producers.
“The effects of lifting the ban are now starting to be seen, not only bringing improved production and efficiencies to our farmers, but some are now selling stock to mainland UK, which is another valuable income stream for them.
“As a result, many of our farmers are increasing the turnover of their businesses without incurring the high capital costs of investing in new farm buildings.”
Rob Perchard and his son Tom run the island’s largest herd of 260 milkers. For many years, the herd average could not break through the 5,000-litre ‘glass ceiling’, but since the use of imported genetics, the herd average has risen to 6,400kg.
Rob says: “We had expected to see an increase of about 10 per cent, so this has surprised us, particularly as we continue to breed for type as a high priority rather than pushing for milk production.”
The plan is to increase cow numbers to about 300, but as Rob explains, quota and land availability are limiting factors to expansion.
“Our case for extra quota has been strong and we have been issued with more, with further litres to come as markets develop. There is a limit to how much land is available and there is a strong demand for it from potato growers, so rents tend to be high, but we work closely with them and do a lot of land swapping.
“Aside from our own land base, we rent land from 20 different landlords, which means much of the fencing is temporary and we have to move stock around a lot. It is a full-time job for one person, moving electric fences, carting water, checking heifer groups and so on.
“Fields tend to be small, so we make big bale silage, which gives us more flexibility. One big advantage is the climate and the fact grass keeps growing through winter.”
The farm employs four staff members in addition to the family.
Tom says: “We had considered going to three times-a-day milking, but labour is one of the limiting factors alongside quota.
“We employ a Portuguese team of Madeiran staff, who are housed on-farm in newly-built quality accommodation.
“We need a premium price for our milk, as it is expensive to produce on Jersey. Our costs are high – contracting prices are double those of the UK – so we have to import concentrate feed and straw which is currently £200/tonne.”
An important income stream for the family in the future is likely to be the sale of cattle.
Tom says: “The gains made by using imported genetics are starting to make a mark in the herd now, meaning stock can compete with Jerseys from anywhere in the world.
“This is not only good for our business at home, but also means our cattle are in demand from a wide spectrum of buyers, keen to buy cattle from Jersey because of the high health status.”
Earlier in the year, a consignment of Jersey cattle were taken to Exeter market to sell, achieving very good returns.
Tom says: “I see huge potential in the future in selling stock into the UK and elsewhere, and this is one of the ways we can expand our business.”