Dairy board chairman Michael Oakes continues our week-long mini-series with an in-depth look at the dairy sector.
One year on from the momentous day that a majority of the British public voted to leave Europe and where are we in the dairy sector? Put simply, it is a mixed bag and a balance between short-term positives and long-term uncertainty.
In the short-term, the decreasing value of sterling has helped reduce the level of dairy imports into the UK and increase our exports, so some have seen a positive impact on their milk price.
But not all dairy companies are exporters – a third of English and Welsh dairy farmers supply the EU co-operative Arla, which pays an EU milk price. The gap between the EU and UK Arla milk price is something that regularly comes up in conversation.
Clear cut
Couple that with the fact most milk buyers in the UK base their milk price around what Arla pays, and you will see that it is not as clear cut as we would expect – hence our call for mandatory price and volume reporting.
On labour, we were struggling to source sufficient on-farm dairy labour prior to June 24 2016 and the situation has been exacerbated. But we are also concerned by the sourcing of labour in many of the allied industries we work with – from veterinarians to tanker drivers, or staff in dairy processing plants.
Dairy farming requires a special type of person – one which has an affinity to animals and people and one which is willing to work extremely unsocial hours in all weather conditions as a minimum.
Trust
Our calls on a future domestic agricultural policy for dairy are not far from our NFU dairy strategy – we want to see minimum standards in milk contracts to stop the abuse we have seen over the recent market downturn; Government regulating on price and volume reporting to increase trust in the dairy supply chain and a true focus on promoting the best of British dairy at home and abroad.
We need to make sure dairy farmers are able to access any future agri-environmental scheme, but we also we need Government to recognise the high standards by which British dairy farmers already produce, both on the environmental and animal welfare front.
When discussing regulation with dairy farmers, the one issue which is always raised is the onerous implementation of the Nitrates Directive. We are yet to see any change in regulation in the year since the vote and that seems less likely now that we are looking at the Great Repeal Bill.
Investment
It is not all negative though – this week the European Court of Justice has passed a judgement which guarantees better labelling of dairy products and the last 12 months has seen massive investment in the UK dairy sector, something we initially thought would be stalled or impacted by the vote last year.
Milk buyers may see Brexit as an opportunity to get more British products on British shelves and reduce our dairy trade imbalance.
If this is true, dairy farmers need to understand their milk buyer’s future growth strategy and see if their plans match their own. UK Dairy can have a positive future post-Brexit, but only if the whole supply chain works together to achieve it.
Source: FGInsight
Link: https://www.fginsight.com/news/eu-referendum-one-year-on-an-in-depth-look-at-the-dairy-sector-22150
