In a world where every event we now experience seems to be ‘unprecedented’ it is hard for us to know what is coming next. As dairy farmers we are used to having to make important decisions, to weigh up pros and cons, costs and benefits. But at the moment, no one seems to know what is coming next, and whether to stick or twist.
I’ve had farmers on the phone to me recently who can’t decide whether they should really be buying fertilizer for £650/tonne for the spring, or whether they should just sell the cows now. These conversations are very worrying, and I don’t think the supply chain is aware yet of how serious they are becoming. As feed, fertiliser, fuel and labour costs to name a few, have risen dramatically on farm, the impact on milk production is quite concerning. Since the summer, milk production has dropped to well below last year’s, and forecasts for the winter are being revised dramatically.
On the other hand, the markets are incredible positive, and strong across the globe. Fonterra is now offering record milk prices for their farmers on the back of the market demand from Asia. We have seen EU commodity prices move up across the board. Prices in the UK have been starting to creep up as well which is helping to temper some of the costs on farm.
The question from dairy farmers is whether farm gate prices will rise quickly enough to offset the extra costs on farm? The latest report from Kite predicts a breakeven price of 33-34ppl for next year, so many farmers will be wanting to know if prices in excess of that are heading their way soon. The retail and food service sector must be under no illusion of the cost inflation in the dairy supply chains that farmers and processors are experiencing and take action to ensure that these extra costs are recognised.
I still maintain that the future of the British dairy sector is certainly a positive one. Our recent work to drive forward a new dairy export strategy has been really well received by the industry and government, and we believe an increase in exports can help deliver a change in dynamics in the dairy sector.
Another positive launch recently is the Dairy Roadmap’s new Climate Ambition. The Dairy Roadmap group, which I currently chair, is led by AHDB, DairyUK and the NFU, but also features over 60 different organisations in the dairy supply chain. The ambition framework developed outlines the route for the British dairy sector to reach net zero. This is important to help us as an industry work towards that goal. Crucially, it also shows the general public that they can continue to enjoy British dairy, knowing it is a sustainable product.
The launch of the ambition has been timed deliberately to coincide with COP26, with all the press headlines dominated by climate change, it’s crucial we showcase our ongoing efforts and future ambitions. But in some ways the timing is far from ideal. I know that many farmers will be wondering whether with current costs, they will still be in dairy next year, never mind being net zero in 20 years’ time.
I agree that this is a massive challenge and we are all currently faced with uncertainty and unprecedented levels of flux and change. But we cannot ignore our consumers who want to know more about the environment than ever. And we cannot ignore the fact that we need to truly put on a pedestal our position as part of the solution in the global battle against climate change. While we have many questions and always much to learn, we already have a lot of the answers.
By consistently and confidently putting those messages across, we can help reassure and reaffirm to consumers and government about our industry and maintain their support; in purchasing sustainable dairy and in supporting our sector to become the best it can be. If you haven’t already seen it, please utilise our new video, which promotes all that is good about our great dairy sector. COP26: UK Dairy Roadmap announces net zero climate ambition (nfuonline.com) and don’t forget our impactful “Rethinking Ruminants” resource pack which can help you spell out the true facts against myths and misinformation surrounding the dairy sector.