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Dairy farming: what is the future?

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01 May 2015, at 12:00am

RICHARD GARD listened to the lively presentations at a recent meeting which considered what might happen within a dairy industry which is said to be changing faster than at any time in the past 50 years

IT all went very well, for the speakers and chairman, until the questions at the recent “What’s the future for dairy farming?” meeting at South Molton in Devon.

The Milk Development Council had brought together two forthright speakers to challenge the audience under the chairmanship of Christian Fox, a 200-cow dairy farmer from Wiltshire.

Despite the fine weather and the call of the silage making, 80 people gathered to consider what was described as “a dairy industry changing faster than at any time in the past 50 years”.

Sean Rickard, formerly with the NFU and now with Cranfield School of Management, spoke about the future direction for UK milk producers. He is said to have the “ear of government” and he explained, with the help of circles, boxes, loops, arrows and clouds just what the forces are for change in the dairy sector, the implications for the supply chain and actions needed for farmers to capture more of the value they create.

Sean proposes that farmers pay more attention to the government and view government in all its forms as their customer rather than their true customer, the next stage in the supply chain. One of the principal forces for change is that the government sees its role as creating a framework for trade but not to interfere in the commercial process.

It is expected that there will be less protection for agriculture and more competition from an expanded Europe. The continuing structure for the Common Agricultural Policy is not sustainable and budgets will be under national control. If a member government wishes to support the agricultural sector it will do so. The UK government is expected not to choose to offer support.

The thrust for dairy farmers has to be larger scale productive efficiency and new processes, he said. A growth in productivity means fewer farmers. Technology and knowledge raise productivity by replacing people with machines. High-quality competitive products are required, incurring lower costs.

It was at this point that a discernible squirming of bottoms on seats was detected from the audience.

The speaker elaborated his theme by emphasising that consumer demands for improvements in animal welfare, traceability, assurance and environmental standards are expected as a right and will not attract premium prices.

The way forward is to look for niche markets that match the needs of consumers in a modern society. He cited the case of the typewriter manufacturer: a business can produce the very best typewriter at a very low cost but sales will be limited.

The option of transferring support from production to environmental schemes would potentially help the dairy sector because of the negligible support currently received. The only way is up.

It is expected, however, that the large farm in the home counties is likely to be able to introduce an environmental programme and attract more funding than the small farmer on the hillsides. In any case, the UK government would be responsible for deciding on modulation in this country and the prospects for long-term support are seen as slim.

Sean proposed a clear vision for a reduction in the numbers of dairy farms and dairy farmers. His view is that the 73% of UK herds with fewer than 100 cows have a limited future. In particular, the 29% with fewer than 40 cows may want the country lifestyle but have no place in the new dairy supply chain.

There may be a future linked to multifunctionality to preserve a diverse, pleasant and safe countryside but this must not be seen as an alternative to improved efficiency for dairying. He also considers that no direct relationship exists between the number of farmers and the appearance of the countryside: the land is still there even if the farmers go.

The current 27% of herds with over 100 cows are expected to represent the future for dairy farming with expansion, growth and superior performance.

The larger progressive dairy farmers have to work together in trusting partnerships between farmer groups, farm suppliers and processors: trust is important to reduce transaction costs incurred by checks and audits within the food chain, he said.

Farmers will need to share the costs of experts in production and marketing and work together with processors to identify trends and align their businesses to be in tune with what people want to buy. “Partnership alliance” is the key phrase to adopt.

It is anticipated that “genetically modified organisms” will transform the food chain. Speciality food products, that deliver health or lifestyle benefits beyond our current understanding of the value of milk, will be able to be developed in collaboration and the dairy farmer will become a prime added-value producer.

Despite the seat squirming, the questions, while the speakers changed laptops, were restrained and limited to enquiries about welfare standards in other countries and the impact of the enlarged community.

Dinosaur thinking…

Ian Potter from Derbyshire was introduced as “much more than a quota broker”. His no-nonsense let’s-get-at-it style of presentation was supported by high-tech film clips to emphasise his points. Derby County conceding nine goals underpinned his thoughts.

In 1999, he wrote in Dairy Farmer about dinosaurs and dinosaur thinking in the dairy industry and he continued with this theme. It is attitudes that he would like to change and he believes must change rather than people. Although he concedes that several organisations should introduce an OTHS (“over the hill scheme”).

The image presented by many organisations within agriculture is one of being tired and retired, he said. Younger people are needed to attend planning meetings and more women need to become involved. He confesses to enjoying and benefiting from women being involved in his own business.

Elected and appointed members should have a strict term of office with defined goals for their role. There needs to be a marriage of organisations and management has to be separated from leadership. Ian believes that the government views agriculture as a lumbering dinosaur and this image has to change.

Signals to the younger members of farming families are too negative. Too many older farmers are saying that they cannot see a future for farming. People should smile when they talk about agriculture.

Pressure to hand on the farm to the next generation should be a thing of the past. It is assumed that a son will follow the father. The son is assumed to be satisfied with this. At present we struggle to attract our children’s interest in the farm. The son chooses a wife and too often she is expected to fit in with the farm. Suspicions arise that she is marrying a farmer for his money and branded a gold-digger if she doesn’t come from farming stock. Dinosaur thinking, he said: “No other industry expects the wife to support the business.”

At this point, three ladies in the audience were laughing so much, with the truth of it all, that the speaker hesitated to allow them to recover. He continued with his recollections of one American farmer’s wife talking of herself as a juggler. Life was a collection of balls. Cooking, cleaning and work around the house are rubber balls: if she drops them they always bounce back to her.

Accounts and financial matters are bowling balls because although if dropped they make a dent, the ball can be picked up again. But family matters are glass balls and they shatter on impact and the wife will get down on her knees and pick up every fragment and try to put it back together again.

The family must come first, Ian said. Life should not revolve around cows but cows revolve around life. A farmer generally knows a lot about breeding, feeding and genetics but little about family life and marketing. There is little credit in boasting that the family hasn’t taken a holiday for many years – dinosaur thinking again.

Different skills will be needed in the future, he said. Coaching, described as working with different people as mentors, should become a monthly activity. We need to learn how to retire gracefully, how to recruit staff and how to recognise their achievements.

It isn’t all about wages. A simple “well done” for a particular job goes a long way in maintaining good staff relationships. Farmers will need to exist in harmony with walkers and riders and not resent their presence or spread slurry over the footpaths. Public perception of farming is important now and will be more so with time.

Currently, we have dairy farmers who happen to be businessmen. In future, there will be businessmen who happen to be dairy farmers. People management will be a big issue and more time will be spent driving a computer than driving a tractor. Business and personal goals will need to be set and written down.

Reference was made to the homily that there are those who plan, those who act, those who plan to act but few who plan and act. The danger is that individuals and the dairy industry as a whole aim too low and the goals are too easily obtained.

It is rare to hear the motivational aspects presented to an audience, expecting to hear about how to obtain an extra penny per litre for their milk, but Ian Potter had judged the topic perfectly and his thoughts were well received. The three ladies dabbed at their eyes and the chairman called for questions.

One of the younger members of the audience, sitting with her husband, challenged the view that the small dairy farmer was doomed. She has children, 35 cows yielding 8,000 litres each, a relief milker, takes an annual holiday and enjoys being a farmer. They work hard but are not depressed about things and their business is solvent. Why should she borrow money, expand the herd, risk losing the farm to the banks and generally take on more pressure and stress?

An older farmer pointed out that he had been in dairying for 30 years and throughout that time he had heard presentations saying that the only way forward was expansion and that the family farm was a thing of the past. To be able to pass on this way of life to his willing son, sitting beside him, was a major reason for doing the job, he said.

There were similar comments along the same vein. The farmers were happy to change direction, to work and co-operate and lose production support. They did not share the vision of huge units (500 to 1,000 cows was mentioned by the panel) with the loss of the family farm.

Although he didn’t actually say it, the feeling came from Sean Rickard that he did not really accept the young wife’s point that they had a good standard of living. One felt that he had done the mental sums and seen that a likely income of £45,000, even if there were no costs incurred, was an insufficient return for the labour of husband, wife and relief milker. What he cannot value is the price placed by the young family on quality of life rather than income.

The future for dairy farming is yet to be decided.

  • Richard Gard can be contacted on 01363 866353 or e-mail rgard@agmed.freeserve.co.uk.