New regulations are coming in soon for UK dairy farmers

It looks as if dairy processors are going to be locked into compulsory milk supply contracts for the first time as devolved governments agreed with the Secretary of State to create a new code of conduct last week. A new statutory code looks likely to come into force this year with two years before full implementation, allowing the industry time to adjust. The code was first suggested by George Eustice in 2018 and has taken some time to mature.

The code in essence will tackle the imbalance of power and whilst a quarter of all dairy farmers supply Arla Co-op these days and are happy with their milk buyer, it leaves 75 per cent of dairy farmers who are maybe not so happy, although many of them will be depending on their milk buyer. However, in principle the imbalance of power has always been an issue and when I started this campaign in 2008 whilst NFU Dairy Board chairman it needed addressing. Back in those days, dairy companies used to sign up dairy farmers, drop others, retrospectively change milk prices and make up the rules as they went along. The three British Co-ops did the best they could, but had poor processing facilities, often poor management and were pretty inefficient overall.

Ironically the Co-op dealt the weakest hand following the break-up of Milk Marque which was a complete disaster; Milklink was the co-op to survive and join Arla when the opportunity arose once Arla itself had changed from being a Danish operation over here taking full advantage and being as guilty as anyone for poor practice, to becoming a proper co-op over in the UK.

Dairy processors were not well managed overall or efficient in those days after decades under the Milk Marketing Board (MMB) which sold them the milk at a price which depended on end use. Furthermore the MMB paid them to build factories, close factories and in some instances funded factories which were in operation a few weeks of the year during peak production.

Oh yes, the end of the MMB affected milk processors far more than farmers, but of course without the protection of the MMB the farmers soon found that the processors had all the power and our dream of getting more for our milk was very short lived. Processors have kept a margin since then and have been able to compete on price knowing that their margin would not be affected and any reduction in price would come out of the farmer’s milk price.

The Wiseman Brothers were able to build a huge liquid milk business in a very short space of time having listed the company in 1994 to selling it for £280million to Muller in 2012; the family receiving their share which was £98million. The Wiseman brothers were smart operators and extremely tough people who had started with a milk round in Glasgow back in the day when milk rounds were at war with each other over customers. By building new state-of-the-art factories tailored to supplying supermarkets with liquid milk and cream, they were able to sell for a lower price to retailers and offer a great service, maintain a good margin and still pay farmers a competitive price. Many other companies lost business and merged or gave up in the face of this new challenge or involved themselves in litigation as Express Dairies did before being taken over in 2003 by Arla which has its origins in Sweden back in 1881.

Wiseman sold to Muller at the top of the market once the writing was on the wall with Arla building their state-of-the-art plant, giving retailers real choice for a very long time. Muller then bought the Dairy Crest business which had been losing money for years; an extraordinary move.

What will the new regulations mean? How will they work? Most importantly what will the unintended consequences be? Will they actually benefit dairy farmers? How will it be enforced? Scotland NFU, Wales NFU, Ulster UFU and the

NFU in England are all backing this legislation. Collectively, they point out that for too long dairy farmers have borne too much of the risk and that inappropriate contract terms are the root of the problem.

Leading figures are advising the organic sector to rethink its opposition to gene editing or risk being ridiculed and marginalised. The Government launched a 10 week consultation in January on gene editing of crops and livestock, arguing that the technology has an important part to play for farmers in adapting to the challenge of sustainable food production. The organic sector has been vehemently opposed to genetic technologies, but Alex Smith, anti-GM campaigner and chair of the Food and Drink Federation Organic Committee says that he believes the tide of opinion on genetic editing (GE) has changed and that approval is inevitable.

Organic opposition to the technology could therefore marginalise the sector’s influence in policy making. Richard Hampton, MD of Omsco, the UK’s largest organic dairy co-op agrees that an outright ban on GE was not necessarily the right approach. Whilst the EU bans both GM and GE, a report is due this April and agriculture ministers have backed the technology, arguing that it could underpin a transition to eco-friendly food production.

Farmers must have the tools to boost sustainable food production and that could well be the best way to limit our dependence on pesticides. Anti-GM campaigners have reacted angrily to the plan as one would expect, I suspect furious that science once again will provide the answers rather than winding the clock back to the 1930s. The organic sector would do well to take good advice from its own prominent leaders, given that conditions today are very different to when they battled against GM over 20 years ago.

It is clear that our present government want the UK to take global leadership in this technology and see its potential commercial success as a way to underscore post-Brexit opportunities. Organic leaders see the legalisation of GE by the UK as almost inevitable and the focus should be on securing regulatory and financial safeguards for organic food and farming. However, all trait selective breeding involving GE is banned under organic rules and keeping this material out of organic must be non-negotiable.

Fruit and veg growers may be forced to move production abroad unless labour costs which are up 50 per cent in the last six years are better reflected in retail prices. A report by consultants Andersons, commissioned by the NFU, found that minimum wage increases have added 34 per cent to costs on the back of a decreasing pool of quality seasonal workers. The NFU warns that some crops which are especially reliant on seasonal workers such as blueberries and raspberries will soon become unviable unless costs are more evenly shared in the supply chain.

It would be a crying shame if these thriving businesses, incredibly valuable to the nation were moved abroad and the produce imported. UK growers are not disputing the increases in the national living wage and they recognise and support the importance of it, but the price to consumers cannot remain static as increases on the hourly rate increases over time from £6.50/hr to £8.72/hr; we need a more level playing field than this.