SKIMMED ALIVE
Unless we pay more for milk then dairy farming in Scotland will collapse, leaving the landscape poorer and risking the domestic supply of this important staple
Why we must pay more for our milk or face the consequences
Pop down to the shops for a pint of milk at the moment and you are likely to be able to buy an everyday staple for just 22p. It’s great for family finances but what does it mean for our farmers when milk is sold for less than it costs to produce?
If the latest statistics are to be believed, the dairy squeeze could mean the end of cows in fields. The number of Scotland’s dairy farmers has been falling steadily from 5,000, when records began in 1903, to just 993 today.
The sharpest fall has been in recent years. The number of dairy farmers in Scotland has fallen off a cliff, dropping from 2,000 in 1998 to under 1,000 today for the first time in 110 years. Between 2012 and 2013 alone, 269 dairy farms folded in Scotland, almost one every day.
If prices stay low then it will mean even more farmers will go out of business as they struggle to put food on the table for their families, never mind feed the cattle.
Like any other product, milk is a global commodity. The recent fall in prices was in part driven by the ban on imports by Russia in the wake of fighting in the Ukraine. Suddenly the European market had a glut of milk with nowhere to go, pushing down prices. Lower than expected demand from China only exacerbated the situation.
There is rightly an inbuilt reticence to intervene in the free market, but if below-cost prices for milk drive dairy farmers out of business, what will happen when Russia starts importing again and China’s demand for milk increases?
Prices will go up and we will be forced to import our own milk from abroad. Worse, in an age when we are trying to reduce our relaince on imports of food, we may have no home-grown industry left and have to rely on UHT and powered milk like the many other countries who have destroyed their dairy industry.
To protect the Scottish dairy farmer, supermarkets need to start behaving themselves and stop using milk as a loss-leader.
At the moment milk is a highly competitive market in Scotland controlled by a handful of processors, principally First Milk, Muller Wiseman, Grahams Dairies, Lactalis and Arla. These companies not only set their price from the global market but demand from the supermarkets. For the last few years they have been forced to cut prices because the supermarkets want to make milk a loss-leader, and can insist that this happens because they have an alternative source of supply in the form of cheap imports. Currently it costs Scottish farmers around 29p to produce a pint of milk – but the price offered by the oligopoly of processors is as little as 20p.
This is simply not good enough. While supermarkets make a profit encouraging consumers to shop with them because they have cheap milk, farmers are going out of business. If supermarkets played it straight and paid farmers a fair price for milk then processors further down the chain would also be able to offer a fair price that would guarantee a longterm future for our dairy producers.
Some supermarkets, notably Waitrose and Marks & Spencer, buy milk from farmers direct at a fair price. Yes, they also sell a pinta for a few pence more but that ensures their suppliers survive into the long term. Even if not all of us can afford to shop at Waitrose or M&S, or have one nearby, we can back a fair price for milk.
There are lots of reasons why all supermarkets – and, by extension, us as their customers – should pay a fair price for milk. In Scotland the death of dairy farming will mean an end to the landscape we know and love. Instead of cows grazing in the fields, we could see only industrial units, where cattle can be kept at a lower cost indoors. Already in England there have been efforts to get planning permission for an indoor – so-called ‘zero-grazing’ – unit housing 8,000 cattle. Much of the milk which is imported from Europe and which is undercutting Scottish dairy producers is produced using legal but ethically dubious industrial practices our farmers rightly avoid.
The loss of dairy farmers will not only affect the look of the landscape but the whole community. It is one of the few forms of farming that still employs signficiant numbers of workers.
‘Instead of cows grazing in fields we could see only industrial units’
The upkeep of the machinery and transport of the goods also supports local businesses, not to mention the local pride from producing high quality food in an area like Ayrshire.
A further frustration for Scotland’s dairy farmers is the price paid for the products their milk is turned into. Except for a few notable exceptions, like Mackie’s ice cream, Scottish produce is sold cheap and too few consumers differentiate it from the produce originating in Ireland or France. Indeed, we now import half our cheese from abroad despite producing enough Scottish cheese for our population.
Protectionism is not an option within the EU, but we can try to instil a culture where Scottish produce is actively championed. Scottish dairy produce should be clearly labelled, for instance, and put at eye level in supermarkets so that consumers can get behind farmers. The duplicitous habit of labelling dairy products as ‘produced in Scotland’ even if the milk is from abroad, must be banned. Scottish produce is from Scottish cows. Even if it is the same price, at least people would have the opportunity to support a local industry.
We must encourage sustainable practise throughout the supply chain. Processors should be encouraged to develop long term contracts that mean dairy farmers can invest in the necessary technology. Supermarkets should accept that if they insist on milk being loss leader they are flying in the face of consumer opinion and threatening our agricultural sector.
If supermarkets and processors cannot behave, we should examine the legislative options. We learned from the 1970s EEC wine lakes and butter mountains resulting from politically-driven quotas that overpaying farmers for their produce is disastrous, but that’s not what we’re talking about. We have already started reacting against predatory prices from supermarkets by, for instance, stipulating that alcohol cannot be sold at less than it costs to buy, while the minimum pricing of booze is our First Minister’s beloved hobby horse.
When an industry is struggling this much, and its collapse would have social and economic ramifications for often remote communities, we do need to look at whether the mechanisms for buying and selling milk are fair. Currently Holyrood is investigating what can be done to help farmers while retaining a free market. Milk prices should not be set by Government any more than potato or wheat prices, but why not stipulate that this staple food cannot be sold for less than it costs to produce in this country, using sustainable and ethical methods?
Milk production is too important to be left to the market – or the supermarket.