The Covid-19 outbreak has seen the almost complete loss of the food service and hospitality markets, as well as increasing price volatility in global markets, which has left farm businesses and processors under increased pressure. This has led to some dairy farmers with no other option but to dispose of milk on farm.
NFU President Minette Batters has called on Defra Secretary of State, George Eustice, to a crisis meeting tomorrow and to take immediate steps to ensure the sustainability of the dairy sector.
Mrs Batters said: “For weeks now, we have been flagging to government in our daily calls the issues within the dairy sector and working with Defra to try and find solutions. But the situation is becoming untenable. Only four weeks ago all of this milk was being used, losing businesses at this stage will leave consumers reliant on convenience stores and other difficult to reach outlets not being able to have access to the same supply of milk.
“We believe there may be at least 2,000 dairy farmers suffering severe financial pressure and that number is growing by the day as a result of the impacts of the coronavirus outbreak and as things develop very few dairy businesses will be left unaffected. We need to move fast to mitigate the impacts of this unfolding crisis on dairy farming businesses across the country.
“The Secretary of State needs to step in now and take urgent and decisive action, before it is too late and many of those iconic dairy businesses go to the wall.”
TFA chief executive, George Dunn, said, “First and foremost, the Government should be scrutinising what retailers are doing to ensure they are increasing throughput of dairy products through their stores to satisfy enhanced retail demand. There is plenty of supply in the sector to remove the need for retailers to limit purchases. There is an opportunity for retailers to provide a wide range of products to consumers who will be looking to recreate restaurant style experiences at home. Limiting the range of products available to consumers is neither helpful nor necessary at this time. Processors must not be put under undue pressure to fund promotions, to access shelf space or retain their retail listing”.
However, we have to accept that not all of the output previously destined for the foodservice sector will find its way to consumers through retail. Alongside the Government’s efforts to enhance retail trade, it must also intervene in the market to support volume reduction measures and remove surplus product.
“Rather than placing stocks of milk into store, by converting it into butter, powder and cheese, the Government should coordinate the purchase of product to be redirected to the charitable sector including food banks and other relief efforts. This will ensure that everyone has access to good quality dairy products and we are not creating a situation where stocks are overhanging the market for when conditions are beginning to return to normal. Short-term volume reduction measures should also be considered as well as retirement options for those dairy farm businesses which may not consider that they have a future beyond the current crisis,” said Mr Dunn.
NFU dairy board chairman Michael Oakes said: “A key issue is that dairy farmers or processors largely cannot access the Treasury schemes designed to help businesses through this crisis. We cannot furlough staff or stop milking cows, and things like business rate holidays don’t apply to us. We need Defra and the Treasury to work together to extend these schemes so that they can be utilised by everyone in the dairy sector.
“It’s important for everyone that we protect the UK dairy sector so when the eating out of home experience is allowed to operate normally again, we have the dairy farmers in business and with the capacity to produce milk that forms the basis for dozens of healthy and nutritious dairy products which are loved by the nation.”?