Cheshire-based Meadow Foods have announced a farm gate milk price increase that will add one penny to the price paid to farmers in July and another in August. Somerset-based Wyke Farms is set to follow suit – a chink of light in what has been a particularly gloomy year to date.
But even as industry analysts and commentators begin to use the ‘r’ word – recovery –Mr Branton, who farms near Exeter, is concerned that there is a danger of failing to learn lessons before the state of the dairy industry starts to improve.
“Processors must do everything possible to pass any increased returns back from the market as soon as possible, in order to boost confidence and avoid a greater loss of production than absolutely necessary,” he said.
“We are now going into a period where production costs are beginning to rise for a number of reasons outside farmer’s control – for example feed costs and exchange rates – and, in some cases we risk losing a critical mass of producers.
“We recognise and appreciate that some processors have already reacted to the more positive market signs, but the challenge that I lay down to everyone else is to follow suit as soon as possible and make sure that your dialogue with producers is clear.
“If supply outstrips demand by just one per cent, this generally reduces the farm gate price by 10 per cent so it is vital that the supply chain works together and shares information to ensure that this doesn’t happen.”
The board’s deputy chairman, Denise Plummer – who farms in Wiltshire – said that one of the key challenges faced by the industry was to maximise the impact of the good times and minimise the effect of the bad.
“We will be looking to the banks for continued support to help us do this. Given the amount of pain the industry continues to face – caused by the weather, input prices, global markets, post-referendum economic uncertainty and the challenges of bovine TB – it certainly feels too early to talk about the green shoots of recovery, but perhaps the seeds of change are germinating.”
Mr Branton added that it was clear market volatility was here to stay.
“In my position on the NFU’s national dairy board I am helping to set the vision, strategy and outlook for our work over the next two years. We are prepared to be bold and have set ourselves the ambitious target of transforming the environment to ensure a better future for our dairy farmers.
“Key to this will be an examination of the Voluntary Code which covers contracts between dairy farmers and retailers. One possible way of strengthening the code is to push for the Groceries Code Adjudicator to have a degree of responsibility for its delivery and for the voluntary code to be extended further up the supply chain.
“This week’s National Livestock Event at the Birmingham NEC is a chance for the industry to get together and a shop window for firms producing goods, services and equipment for the dairy and livestock sector. The amount of business carried out at the event will perhaps give an early indication of whether the sector is feeling confident.”