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Phil Latham: Expanding the herd at home, and pondering the industry's collective vulnerability

Insights

It is an odd thing to say given this month’s news, but our herd is expanding again as 70 home-reared, pedigree Brown Swiss heifers calved over the Christmas period. Santa brought some kick bars and I am sure the herd manager and his colleagues were delighted with the extra burden of training these young ladies, but they seem to be settling in well.

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There is no doubt these are tense times for dairy farmers. Massive media exposure has highlighted the problems faced by the industry as a global surplus of production has been coupled with limited activity from China and Russia and a supermarket price war creating massive downward pressure on prices.

 

First Milk’s exposure to the commodity markets has forced it to snatch money back from its members to keep the cash and milk flowing.

 

Having lost £150,000 when some of the directors of Milk Direct decided to invest my milk cheque in their diversification, I can understand the sickness some will be feeling looking at their own cash flows and wondering who to approach first for better payment terms.

 

Our response to a combination of TB and milk price pressure was to cut back numbers and reduce output, searching for a better margin by reducing the cost base with more milk from grass.

 

Phil Latham, Cheshire

Phil Latham farms 385ha (950 acres) in Cheshire, split between the family farm on Lord Cholmondeley's estate and Organsdale Farm near Tarporley. He milks 300 cows, mainly pedigree Brown Swiss, as well as diversifying into business units and an equestrian facility. He is also a Nuffield Scholar.

High yielding cows do not adapt well to a lower input regime and last year I found this to be true with my own herd. Cutting numbers did not necessarily help either, as a business geared up for a number of cows looks rather sick in output per hectare terms if you scale back.

 

If ever there was a case needed for all dairy contracts to be governed by the voluntary code, then surely this is it. Here, we have a farmer-owned co-operative behaving in a way we would find quite deplorable if it was not a co-op.

 

With volumes up, there are precious few alternatives for placing your milk with others buyers and there are rumours several hundred farmers will have no contract at all come spring.

 

It is at times like this when we need to take a long view. It may be we have to forego profits for Lent, but there will be an upswing in price, no doubt slower to come than the down – it is Newton’s fourth law of milk prices – but will we have learned anything from our collective vulnerability when it comes?

 

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