- Competition rules temporarily relaxed to allow dairy industry to work together more
- Move will allow dairy farmers to reroute surplus milk in the supply chain so it can be used for other products
- Government urges farmers facing difficulty to apply for support available
The government will temporarily relax elements of UK competition law to support the dairy industry through the coronavirus outbreak.
The intention is that the industry will work together to address current market challenges, avoiding waste and maintaining productive capacity to meet future demand.
With the UK’s dairy farmers producing over 40 million litres of milk every day, the legislation, which will be laid shortly, will allow the industry to adapt to changes in the supply chain including decreased demand from the hospitality sector and reduced collection by retailers who have had to close.
The government has already relaxed competition rules to allow retailers, suppliers and logistic services to work together. While this has already allowed the dairy industry to redirect some of their supplies to retailers, today’s announcement will enable further collaboration between dairy farmers and producers so they can avoid their surplus milk going to waste and harming the environment.
This could include sharing labour and facilities, cooperating to temporarily reduce production or identifying where there is hidden capacity in the supply chain for processing milk into other dairy products such as cheese and butter.
Dairy UK and the Agriculture and Horticulture Development Board (AHDB) will now lead work to bring the industry together to identify spare processing capacity, how to stimulate demand and how production could be temporarily reduced.
Environment Secretary George Eustice said: “Our dairy industry plays a crucial role in feeding the nation and it is essential that they are able to work together at this time.
“We’ve heard loud and clear our dairy farmers’ concerns which is why we are further suspending competition rules law to allow dairy farmers to work together on some of the most pressing challenges they are facing. I am also urging farm businesses to access the loans that are available from their bank to support them in this period.
“We welcome our farmers’ heroic efforts in ensuring food supplies remain resilient and will continue to support them through this difficult time.”
The dairy sector is the UK’s largest farming sector, with milk accounting for 16.85% of total agricultural output in the UK in 2018.
Of this, approximately 50% of UK dairy sector output is fresh milk and as such accounts for a significant amount of UK processing capacity.
The government encourages any farm business facing difficulties to access the range of support which has been put in place to help businesses manage this challenging period. This includes the Coronavirus Business Interruption Loan Scheme farming businesses can access. The government has been speaking to the banks and they are ready to support farm businesses as best they can.
Meanwhile appeals for urgent government action to save the dairy industry have been backed by the entire supply chain, including UK farming unions, RABDF, Dairy UK and the Provision Trade Federation.
The group has written to the Defra Secretary of State George Eustice to reiterate its support for the proposals put forward by the NFU to protect dairy farm businesses from irreversible damage:
- A targeted grant scheme for affected farmers that is similar to the Retail and Hospitality Grant Scheme;
- A fully funded, government run voluntary national production reduction scheme; which effectively furloughs dairy cows;
- Engagement with the EU Commission to introduce market support measures, such as Private Storage Aid.
In the letter, they write: “The situation is continuing to escalate rapidly with serious financial consequences for many individual businesses. There are farmers unable to pay their feed companies and having to sell cows. There are dairy companies that, having lost all of their key markets, still have to deal with the milk and find a home for it in an oversupplied marketplace.
“These may have been isolated impacts to start with, but we know that already around a quarter of the dairy industry has been affected within just a matter of weeks.
“It is important to reiterate that only a matter of weeks ago, all of this milk had a good home, and hopefully in a few months’ time, those markets will return. The British dairy sector wants to be there to meet that demand, so it is crucial that the industry is not irreversibly damaged by this crisis.
“We need action now, as well as a more considered response for the medium and longer-term measures. We cannot over-emphasise the urgency of the current situation. Unprecedented times call for unprecedented measures, as government is already demonstrating elsewhere. We believe now is the time to do all we can to ensure the long-term sustainability of the UK dairy sector.”