Dairy farmers are in trouble. The price they get from processors and, ultimately, supermarkets, is less than it costs them to get the milk from cows.
The irony is that as dairy farmers go out of business, shoppers can buy milk off the shelf for less than 50p a litre – that’s also less than most bottled water.
The basic reason is simple enough. Too much milk is being produced and, as has been noted many a time in this column and elsewhere, the most basic law of supply and demand applies to food – one per cent over-supply reduces prices, one per cent under raises them. And milk supply is well over one per cent above demand.
One effect is to push dairy farming further towards what has already happened with, for example, pig and potato production. That is, fewer and fewer producers, those staying in business getting bigger and more specialised. The number of dairy farms in England has dropped below 10,000, half the number of a decade ago and less than one fifth of what it was in the 1960s. In Scotland, the number of dairy farmers hovers around 1,000, less than two thirds of a decade ago. But the number of cows increased by well over 9,000 last year to 173,283.
Dairy farming is best suited to the wetter west of Britain where winters – climate change notwithstanding – are milder and grass growth starts earlier. Cows can get out to grass earlier in spring and stay out longer in autumn. That’s why almost 60 per cent of Scotland’s dairy herds are in Ayrshire, Dumfriesshire and Lanarkshire.
The most recent statistics show that in our part of the world, Berwickshire now has only two dairy herds, average size 443 cows; East Lothian has two herds, average size 316; Peeblesshire three herds, average 321; and Roxburghshire eight herds, average 293.
Not too many herds, a lot of cows, all well managed and productive and all, according to speakers at the recent Semex dairy conference in Glasgow, losing money.
The dairy depression can be exaggerated. As usual, when the general media gets hold of a story that the specialist press has been flagging up for months, there seems to be a need to pull heartstrings. One story I saw went for the plucky little family farm version, claiming that two thirds of dairy farmers are on family credit. I doubt that many are in that state.
But, as farmers and the NFU claim with increasing urgency, something must be done. The problem is that most milk is sold through supermarkets and every supermarket I can think of has big, big, problems of its own. The chances of succour from that direction in the way of higher prices paid to suppliers are approximately nil. The best hope for those who stay in business, and almost by definition they’re going to be the large-scale who plan to get bigger, is that total milk production will fall.