Milk Committee chairman's Blog - 10 April 2020

The closing of cafes and restaurants as dairy farmers approach spring flush is the perfect storm of bad news for the industry, writes Milk Committee chairman Gary Mitchell. In his latest blog, Gary, a dairy farmer at Stranraer looks at the facts around this worrying time and what he is doing in preparation.  He writes:

I can’t believe on 3 March I was in a London meeting with UK Unions and DEFRA on final discussions regarding a consultation paper that was going to be released in April, after of eight years lobbying.   Since the 2012 crisis, we were now about to have one chance at having milk contracts reviewed, which was one of my main reasons for taking on the role of Milk Chairman at NFU Scotland for a second time.

On 12 March, we had Cabinet Secretary Fergus Ewing MSP at our Milk Committee meeting to hear our views on where we saw changes in contracts that could make a difference in how the supply chain could work.  This was time well spent with the Minster and I was very encouraged by the input from our new milk representatives.

To think that this was only one month ago.  No one could have predicted such a change in circumstances as Covid-19 has now taken over our daily life in every way, human interaction and pursuits like shopping no longer pleasurable but just a necessity.

The first impressions on social media and TV were that milk sales will go through the roof due to the panic buying, but this did not substitute for the melt down after lockdown when coffee shops, fast food chains, schools and other food sector outlets finally closed their doors.  This, in conjunction with processing factories enduring their own difficulties with social distancing and staff illness has made this truly the perfect storm.

I have taken many calls from farmers questioning why people are not using the same amount of milk at home as they would do in a normal situation. The data I’ve studied so far is that approximately 10 per cent of UK milk is supplied to cafes, hotels etc, then we have wholesalers who also supply food manufacturing companies.  

One simple example is that the UK has almost 28 million households and if they make instant coffee or have a cup of tea at home they will be using at most 20-30ml of milk in their drink, but a latte or cappuccino from a high street chain will use from 120-150 ml per cup so when you do the sums that is a huge drop in liquid consumption.  

This underlines why, earlier in the week, NFU Scotland contacted the retail consortium to ask for them to please stop rationing dairy products at major supermarkets to ensure we let people buy as much as they want and try to encourage a flywheel of purchasing behaviour to help take up this demand slack.

To add to the problem the industry is now heading into spring flush. Many cows have now calved and are being fully grazed, so we project milk volumes are still set to rise.   At the current time industry experts suggest there are over a million litres surplus daily in the UK, and historic data concludes this figure will rise by 20 May, the traditional date of spring flush peak.  

With this drop in demand and increase in supply it doesn’t take a genius to see where we are heading at a rapid pace.  The processors inform me that if COVID-19 hadn’t come, every one of these “spare” litres would have been required, as they all had both a processing and consumer home.

So as dairy farmers, we have a big challenge ahead. Can we ease production enough in the short term without damaging the long term?  If we assume the virus comes under control in the same timescales as China, then the management of both milk supply and demand in the next 12 weeks are crucial.

In collaboration with the other UK unions we have put some ideas to Government about how we think we could best help the situation and we eagerly await a response. Wales has been badly hit with many farmers dumping milk daily with no let-up in sight.

Since Monday, many memories of the 2016 crisis have prompted me to act this week to prepare for the worst on my own farm.  

Firstly, I have suspended any truly unnecessary cost on the farm for three months.  I have contacted any asset finance companies that I use, and, in all cases, received a three-month repayment holiday (almost all finance companies are currently offering this).  

The herd welfare is key, but feed cost and availability needs to be carefully considered, so all cows over (later lactation) 200 days in milk will be fed more forage and less concentrate.  

Staff that live on farm must only travel in one vehicle to shop etc and we have undertaken a plan to reduce as much traffic coming on and off the farm.  We have also introduced some strong guidelines to ensure our tanker driver can continue to uplift milk in a safe and secure manner.

Now many may say I’m on an Arla contract so I shouldn’t be too worried, but in August 2016 I received 18.25p/l and I know many who are a lot worse off, but let’s not be complacent. Prepare for the worse and anything better than that will be a bonus.  

The past 21 days have been extremely busy for the Union, and from a dairy perspective you have my assurance that myself, the Milk Committee, the policy team and the wider staff network are doing everything they can to work in the interest of the members.  

I know how difficult it can be to collate and disseminate the amount of information out there, however you have my guarantee we are at the forefront of the discussions that are unfolding and we will do everything we can to ensure we all get through this as best we can.  

Gurus within Government have split the Covid-19 virus into four major stages: response, reset, restart and recovery.  At the current time at least 95% of us are still in the response stage. I hope the next three stages come along soon and as an industry, dairy farming in Scotland can adapt positively.  This is a fast-moving ship, but please do not hesitate to contact us with any issue or concern and please stay safe and I look forward to seeing you all in the recovery stage!

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