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Potter's View: ‘Westbury is for the benefit of members’

Insights

This month, Ian Potter warns about safeguarding the industry’s image and looks at the role of Westbury in the spring flush.

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This year’s show season will soon be with us, and let’s hope it will be a better showcase than last year which was not good from a public image point of view. I refer to the extensive negative national media coverage of an investigation involving at least one exhibitor at the Great Yorkshire Show.

 

The Daily Telegraph headline was ‘Mystery of super glued udders grips farm show’ and it damaged the image of the whole industry. We have just over 11,000

 

GB dairy farmers, of which about 300+ enjoy showing their animals. Yet among those 300 we have a handful of five or six hardcore dairy exhibitors who continue to play hide and seek with cow fixing and in doing so put the industry’s image at risk.

 

As we start the showing season, the indications are there will be increased covert surveillance at shows from farmers, judges, organisations and vets who are all keen to protect the image of British dairying and who will blow the whistle on any cheats. Show organisers, you have been warned.

 

The review of the voluntary code by the Rt Hon Alex Fergusson has caused a bit of a stir. Expert dairy lawyer William Neville, of Burges Salmon, gave the code a beating at this year’s Semex Conference, with several of his comments and claims irritating both George Jamieson (NFUS) and Mansel Raymond (NFU E&W).

 

The announcement of the review was coupled with the requirement that all submissions be made to the code’s staunch supporters as in NFUS, NFU and Dairy UK, rather than direct to the chairman. This has resulted in several comments that, as a result, the review will be a waste of time.

 

Furthermore, not all processors or farmers are members of one of the organisations and it is a certainty that all farmers need a voice in the debate. For what it’s worth today the code is holding back prices and freezing farm gate milk price movements from processors who are under the Code and who fear the three month resignation rule. The word is that the NFUs are touting an alternative option for co-op members to sign up to.

 

Westbury Arla’s recent decision to utilise Westbury to process milk concentrate from Germany following a factory fire at its Pronsfeld plant is understandable, but has caused a few shivers among GB processors.

 

Yes, it will cost Arla members money to transport the concentrate from Germany to Westbury. Equally important, though, is the reality it will also result in less GB milk being bought by Arla and First Milk during the flush. This is likely to exert even more pressure on weak spot prices for those with no or insufficient processing to deal with the increased peak volume of milk. That’s not Arla or First Milk’s problem because their duty is undoubtedly to their members.

 

Judging by at least two emails I have received the penny has not dropped for some producers that Westbury is for the benefit of the members of the two co-ops and not for the benefit of all, like some industry charity. A co-op’s aim is simply to extract the maximum value from each litre of milk it processes or trades and to pass back the financial benefit to members.

 

This winter is delivering record milk prices, although I do recognise the battle some are having with the severe wet weather and TB. Domestically, prices are holding firm on account of the Arla factor which, in my opinion, now influences all GB liquid milk prices.

 

High international commodity prices are cultivating confidence and the main fear is whether they will change overnight only to be immediately followed by downward farmgate price movements. As one leading industry guru commented to me it’s fantastic that dairy farmers are at last talking about return on capital.

 

But where industry bodies and officials are encouraging you to produce more milk you need to satisfy yourselves that, postquota, such production is sustainable. I say investigate their reasons for believing in that increased demand and that your buyer will be genuinely able to capitalise on it.

 

Before you put a long-term noose around the farm’s neck or saddle it with significant borrowings, make sure you understand the potential negatives and any uncertainties.

 

Many dairy farmers have been demoralised for years but collective expansion of GB dairying needs careful planning, especially in terms of processing - in particular our lack of drying capacity which is an issue. And remember, EU milk consumption is more or less static which means any additional EU milk production after the ending of milk quotas will need to be globally traded. Let’s hope those Chinese continue wanting dairy and have the funds to pay for it!

 

Finally, I want to give a red alert warning for you to carefully check your RPA 2013/2014 Start of Year Producer Notification. We have come across several which are incorrect, ranging from one which showed 8664 litres more than the producer should have, to one which shortchanged the producer by a whopping 108,347 litres. Check your figures, in particular the recent quota awards, and if in doubt contact milk.quotas@rpa.gsi.gov.uk requesting it re-checks your June 1, 2013 notification and confirms the statement is accurate.

 

While on the subject of quotas, I wish to lay to rest yet another myth. The total UK National Reserve quota is 547 million litres and in the unlikely event we exceed our quota, the relevant National Reserve litreage is added to the available quota to reduce any super levy.

 

Whether the UK will pay super levy at the end of March 2015 is up for debate (but not so far as I am concerned), unlike the position in Southern Ireland where it is equally clear farmers will


pay super levy in 2014 and 2015 as the cost of expansion ready for even greater production post quotas.

Ian Potter

Ian is a specialist milk quota and entitlement broker. Comments please to ianpotter@ipaquotas.co.uk

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