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The milk crisis: a big issue for practices?

by
01 October 2015, at 1:00am

RICHARD GARD reports on the current crisis and believes the future make-up of dairy herds is a real problem with the next few months likely to influence the future for many veterinary practices

THE summer of 2015 showed a fall of roughly 26% in the farmgate price for milk compared to the previous year.

At the Total Dairy Conference in June, a snapshot survey of the herds represented showed a variation of some 10p in the price the farmers were receiving per litre. The complexity of contracts, from guaranteed prices that allow a margin over costs, to nil profit, to loss, was a major talking point.

In July, a Farm Crisis Meeting was held in Somerset and strong words were spoken from the platform, but also afterwards, where farming organisations came in for some verbal bashing.

It was said that the UK dairy industry was losing £3 million per day compared to last year. It was said that the farmers were producing more milk than the market requires. It was said that there is international overproduction of milk. A coalition of organisations was put forward to “find a solution to the long-term future of dairying”.

It was agreed that the milk retailers should stop selling milk too cheaply and the demonstrations, clearing milk from supermarket shelves, showed farmer frustration and highlighted their low returns to the public.

The call is for the retailer to “act responsibly”. It was said that many farmers would have to look for new work areas in future.

It is well recognised that the number of milk producers has been falling steadily in recent years. England and Wales had 15,000 producers in 2005 and have under 10,000 today.

The number of cows in the UK has remained steady at about 1.8 million. There has been a small increase in the EU with some 24 million cows and the UK rates 30th for cow numbers in the world (India is No. 1 with 45 million).

Due to the steadiness of the cow numbers, the UK herds that have remained have provided the same volume of “cow work” for veterinary practices.

In fact, with the escalating recognition of welfare benefits, there has been an increase in veterinary work to develop herd health programmes and reduce the incidence of disease. That situation is expected to change.

There have been farm-gate milk crises in the past but the main cause was low milk retail prices and a few blockaded processors convinced the management that continuity of supply was a benefit and upped the price after a suitable period of stonewalling.

Two battles

Today, with global over-production, the farmer has two battles to fight: low product demand and low price. At the crisis meeting there were pleas for “good leadership at the top” with an undercurrent of a need for a change of personnel.

Many farmers had been encouraged to expand cow numbers, buy land, invest in machinery and plan for longterm growth. There are echoes here of the situation in the USA where profitability plummeted in 2009 only for farmers to be rescued by major buying of milk powder by China.

The farmers with herds that remained in full productive mode benefitted greatly when the upswing came, but during the recession none of the pundits is said to have foretold future profit. All was doom and gloom at the time.

There is much talk of the UK dairy industry. Quotas have gone to be replaced by production contracts. Over-production can result in a reduced price for the extra milk or even a breaking of the contract. The call is for the farmers, milk buyers, processors, retailers and the government to work together in a co-ordinated way to save the industry.

Behind the scenes there are expected to be anxious meetings. In many regions there is limited processing capacity and the idea of the farmer knowing the processors and arranging a good deal are fast disappearing, if not already history.

Last month the Royal Association of British Dairy Farmers predicted a fall to 5,000 milk producers in the UK if farm-gate prices do not improve by the end of this coming winter.

Clearly there is no point in losing the herds if the remainder expand to maintain national production, so it is assumed that the plan is for a stable market place for UK production from some one million cows. Veterinary practices will need to consider carefully what this would mean for their cattle work.

It does seem likely that a farmers’ organisation would ramp up the negative while negotiations are in hand to overcome the current low profitability, with the hope that better milk marketing would be achieved and liquid milk withdrawn from the loss-leader supermarket category of product.

There are also other opportunities that can be developed that would alleviate the situation and one of these was mooted at the crisis meeting.

Farmers have indicated that they would wish to stop producing milk for reasons of low profitability, no family continuance, fresh investment needed, and bTB.

This may be a particular issue in the south-west but while a herd is under restriction for bTB the economics of having a successful herd sale are greatly disadvantaged. But, if it was identified how many dairy herds were bTB restricted and wanted to sell up, there would be a willing pool of candidates for a support programme.

Additionally, the cost of supporting a bTB restricted herd in the hotspot areas, with testing and compensation for reactors, would be eliminated. It should not be too difficult to put forward a beneficial case to greatly reduce infected herds, allow farmers to retire with dignity and reduce overall milk production.

However, the limitation is a veterinary one. There are some 7,000 cattle herds under bTB restriction but the numerical distinction between dairy herds and beef herds appears important.

If the land utilised by the dairy herd is then occupied by beef cattle, will

the level of bTB then return to the overall farm level before the dairy herd went? There is much talk of cattle-tocattle transmission within the control programme but is the disease in the longer living cows or the short living beef for meat?

It would not be difficult for veterinary practices to consider the testing results from their own dairy clients’ herds to identify dairy bTB disease or beef bTB disease.

If veterinary practices wish to be proactive in determining the future volume of dairy herd work, now is the time to consider the influential diseases affecting longevity and productivity. It may be that retiring bTB dairy herds would have a direct effect on the local incidence of other diseases.

The issue of UK milk production and the future make up of dairy herds is a real problem and the next few months may influence the future for many veterinary practices.

Certainly, there is a great deal of talking taking place and many more views and opinions are expected to be forthcoming. Veterinary organisations should be actively considering how local veterinary knowledge would assist a positive outcome.