Duncan Farrington: Falling milk prices could be catastrophic

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Although not a dairy farmer I have plenty of friends around the country who are; the numbers are decreasing, with about 10 leaving the industry every week.

The UK currently has about 14,000 dairy farmers producing 80 per cent of Britain’s dairy products.

As with decreasing oil prices, one can’t help but notice milk prices are also in freefall on supermarket shelves; at about 43p per litre it is cheaper than bottled water and less than half the price of cola.

The unsustainable prices are hitting the headlines with all sorts of people being blamed, not least the supermarkets for forcing farmers out of business.

However, while I have genuine sympathy for farmers having to sell their milk for less than the cost of production, it is too simplistic just to blame supermarket price wars.

As with many industries in a free-market global society, the trend of fewer UK dairy farmers will continue while the size of those remaining will increase.

Where a few years ago the average dairy herd was about 80 cows, they are now two or three times that size, becoming more efficient and producing more milk.

Long-term there is a huge growing demand for milk and dairy products globally. However, at the moment this has dropped off. The slowing Chinese economy means people there are consuming less milk, including British produced milk powder; the situation being so bad that Chinese dairy farmers are pouring milk down the drains and culling cattle.

Secondly due to economic sanctions against Russia, the Russians are currently not buying any French cheeses.

Additionally, because of warm wet weather in the UK and Ireland over the past few months, grass has grown well and the cows have produced plenty of milk, all at a time when there simply isn’t the demand.

Basically the situation for dairy farmers around the world is going to get worse before it improves.

Everyone from farmers and processors to retailers and politicians are trying to work out a way forward.

Unlike the price of oil going down (and let’s face it, I like paying £10 less every time I fill up the car!) we are talking about an industry controlled by multi-national companies who can manipulate the price, and politics.

Dairy farmers are small businesses at the mercy of the market, and therefore a balance has to be struck between nurturing an efficient British dairy sector, while ensuring the industry doesn’t disappear completely.

This would be catastrophic on all levels, especially when demand for milk increases if we can’t produce it here in our own country.

We should relish quality milk produced in Britain.

Milk is packed full of goodness with dozens of proteins; vitamins; minerals; carbohydrates and healthy fats. Full fat milk (3.5 per cent) has less than a third of the fat content of a “low fat” chicken dinner (11 per cent).

Also at less than half the price of cola and full of calcium rather than sugar, it is better for your teeth too.

Go and buy an extra pint today, great value for a fantastic product!