July 20, 2012

 

UK dairy farming dispute gets hot, heavy

 

 

With sharp divisions following perceived political lines between the left and Tory voting farmers, or between those who see a special role for farmers and those who believe in farmers being left to sink or swim in a free market, the dairy farming debate is getting hot and heavy in the UK.

 

However, a fiendishly clever farmers' plot could yet swing the outcome. It's a row that should be watched closely by Irish farmers. Like British farmers, they are paid significantly less than the EU average for their milk.

 

Irish farmers, however, are more efficient than most in the EU at keeping milk production costs low - unless the weather is disastrous, as in 2012. And Irish farmers depend very heavily on export markets, whereas British farmers rely mostly on their home market for liquid milk.

 

Their argument is with big supermarket chains accused of paying farmers less for milk than it costs to produce. (Although Tesco, Marks & Spencer, Sainsbury's and Waitrose have contracts that allow their small minority of dairy farmer suppliers to at least recover the cost of producing milk).

 

Farmers say supermarkets have increased their profit on milk nearly six-fold in 16 years - during which 20,000 dairy farms disappeared. The UK still has 14,500 farmers, and 5,000 attended recent protest meetings.

 

They have received public backing from those who believe everyone in the supply chain - farmers, dairies, supermarkets -is entitled to an honest profit, and from those who fear that the British countryside will be spoiled by huge US-style dairy farmers, the only ones which could survive.

 

Before it comes to that, farmers have a nuclear option, which can be summed up as "Pay up - or the cow gets it." They could move to copy the Co-operatives Working Together Herd Retirement Programme which commenced in the US in 2003 - but with a decidedly British flavour.

 

The US programme arranged compensation for dairy farmers who slaughtered more than 500,000 cows in order to cut milk volume, triggering a market response of rising milk prices. In some ways, it's an ideal solution for dairy farmers who can't afford to keep their cows at current milk prices. The cows are worth more in the buoyant beef market right now, and if enough are taken out, milk volumes fall far enough for prices to recover - giving farmers some much-needed control over their market.

 

It should be welcomed by Britain's free market ideologues who say losses are the market's way of telling producers to quit and do something else, and less milk should be produced.

 

British farmers will have to bite the bullet fast if they are to make the most of their threat that, "If the retailers won't pay for the milk, the cows will."

 

They have the opportunity to orchestrate a nightmare PR scenario for the supermarkets, sending thousands of cows to slaughter because greedy retailers are screwing farmers - ideally timed to coincide with the countryside themed opening of the London Olympics on July 27.

 

It is suggested the farmers' campaign could be kick-started with a photo-shoot of haltered cows (including some pretty Jerseys) in front of supermarkets, threatened by a farmer holding a bolt gun. The suggested message to Britain's animal-loving public is "Retailer X pays a good price for milk, so the cows can live. Retailer Y pays a bad price, and the cows have to die. Farmers can't afford to keep them."

 

Irish dairy farmers will watch with keen interest to see how their colleagues across the Irish Sea will get on. Our cattle farmers will watch too; if the milk row gets dirty, they could suffer due to a flood of cow burger beef in the UK.