UFU comment on EFRA report on dairy prices

Wednesday, 21 January, 2015

The House of Commons’ Environment, Food and Rural Affairs (EFRA) committee have put forward a number of recommendations that could help alleviate some of the pressures facing the UK dairy industry. However, many of these recommendations are not new to the UFU who met with Liz Truss, the Secretary of State for Environment, Food and Rural Affairs, in November 2014, to highlight the cash flow concerns being experienced by Northern Ireland Dairy Farmers and to put forward a number of proposals that would ensure a fairer, more sustainable dairy industry going forward.

Commenting on EFRA’s committee report UFU President Ian Marshall said: “We are all aware of the issues currently facing the dairy industry and of the implications for dairy farmers. Since April 2014 Northern Ireland has witnessed the base price for milk drop substantially from 32ppl in April to 21.50ppl in December.  In addition Northern Ireland dairy farmers tend to see a drop in the price of milk before their GB counterparts due to its exposure to export markets, which sees NI export 85% of its milk. 

“Back in November when I met with Mrs Truss, we called for a review of the EU intervention price for dairy products, she did not support our proposal, so we therefore welcome the recommendation put forward by the EFRA Committee to seek a commitment from the European Commission to review the intervention price for milk.  This in effect would lessen the impact of negative price volatility when commodity markets drop again to an unsustainable level and would see farmers receiving a price that could reflect the actual cost of production.  There is a meeting convened next week in Brussels, to review the EU Milk Package, which presents an ideal opportunity for the Dairy Industry to press for this review.

“I am also encouraged by the focus in EFRA’s report on the role of the Groceries Code Adjudicator. The UFU has always believed that the GCA’s remit should be extended to cover primary producers and that the GCA should have the power to launch investigations rather than just responding to complaints made.”

Ian continued: “At a local level, we have discussed a number of other proposals which could be utilised by farmers across all sectors, such as ‘capital holidays’ for long term farm business loans. We also have put forward proposals for the introduction of a Farm Management Deposit Scheme (FMD) to assist primary producers in dealing effectively with fluctuations in their farm business cash flows. Further options would be to extend income averaging from two-five years and also to open the debate on the use of hedging mechanisms in milk pricing, which could mitigate against price volatility.  Finally, new export markets for NI dairy products and ensuring new product development and market research funding opportunities are utilised wherever possible is also crucial going forward.”

Ian concluded: “It is looking as if  key commodity prices are bottoming out, but this does not relieve the hardship being felt on many dairy farms and in light of this, the UFU will continue in its efforts to lobby on behalf of our members to ensure that some if not all of these measures are put in place.  This week, we will be meeting with a number of MLA’s to discuss the dairy situation, increasing political pressure to get some of our proposed measures in place to ensure that our local Dairy Industry is able to nurture the long term prospects that await our sector.”