UK Milk Crisis – The Rest of The Story

You’ve heard about the milk crisis in the UK. Food & Water Europe’s Eve Mitchell gives you the rest of the story.

By Eve Mitchell

dairy cows grazing

UK dairy farmers are understandably at their wits’ ends. Trying to stay in business selling your goods at a price that doesn’t cover what it costs you to make it must really wear you down when you know what you make is in nearly every fridge in the land. Farmers have been squeezed hard, particularly by supermarkets using milk as a loss leader (of course they want to pay as little as possible if they aim to sell the milk at a loss anyhow).

Video of cows in supermarket milk aisles and farmers spoofing the Icebucket Challenge with milk and tractors show farmers can’t be pushed forever, but meanwhile news breaks of a Westcountry cheese maker (supplied by 30 dairies) shutting up shop. The occasional news story does manage to remember that consumers have a clear responsibility to pay a fair price. I was so happy to see that the number of folks going straight to the farmer has spiked 700 percent since the start of the year. That means we are meeting more farmers and more farmers are getting a decent deal.

Yet it’s been coming for ages, and lifting EU dairy quotas in April couldn’t have helped. The quotas were set up in 1984 to deal with overproduction – the Milk Lakes and Butter Mountains of legend. Too many farmers appear to have forgotten this and grabbed the chance to increase their output, as the UK’s June 2015 production was up 3.7 percent (another 39 million litres of milk on the market) from the previous year, and 5 percent in Northern Ireland, where increasing production is official policy.

The National Farmers Union predicted lifting quotas would not risk repeated overproduction, saying while production might increase in “the most efficient” countries (presumably the ones with the most megafarms and fewest farmers), fear of a price collapse “does not tally with the fact that the strong prices of recent years have been maintained even though the EU was well below quota.” Hmmmm. Farmers seem to struggle with their leadership – it was a former UK farming boss who was pressed to resign in June as boss of First Milk amid falling farmgate prices. Apparently his failing to know the price of a pint of milk when interviewed as a Government official during the 2012 crisis didn’t sound the right warning.

Now we’ve got UK farming chief Elizabeth Truss telling us snazzy labels and cheese sales will “turbo charge” British farming. She’s even refloated the idea of a dairy futures market. These are ok, but they don’t address the real problem – oversupply.

Fixing it will be hard because it’s become so bad. Policies need to deal with a few basics to have any chance of helping:

1) Is demand rising or falling? It is all the rage to assume rising demand in China means we can all export our way out of problems. This line of thinking is riddled with errors:

2) Does trade policy make sense? A couple of things to chew on here:

  • Other countries are not obliged to enact domestic policies that help us out. There is no reason to assume UK exports aren’t in fact the thing other local communities are moving away from to support their own farmers.

3) Will the whistles and bells actually help? A dairy futures market raises more questions than it fixes:

  • Liquid milk is a very fragile product that requires great care in clean, expensive, refrigerated storage and transport, and even then it doesn’t last long. Getting all that worked into a futures market may be even harder than it sounds.
  • While a perfect futures market may smooth out price volatility, if we’ve learned anything about the voracious nature of speculators, it could actually make things much, much worse – and you don’t know until it is happening.
  • It is hard to understand how a futures market will help the root oversupply problem. This must mean that Defra still thinks oversupply is either a temporary problem or one that it can soak up with China, neither of which seems to be true.

Here’s what we do need:

  • More supermarkets to commit to doing the right thing from now on. That includes no more milk loss leaders, and committing to only using fair processors. Special products are great, but they can’t be gimmicks that fade away because of cost cutting on the cheap stuff.
  • Joined-up farming policy that ensures there are lots of family farms with lots of cows on lots of the fields that keep our land green and pleasant. Huge sheds and vast slurry lagoons just aren’t the same.
  • Joined-up trade policy.
  • Milk drinkers and cheese lovers to seek out the good stuff (local, humane, trustworthy, tasty, fresh dairy) and pay a fair price for it.

Then maybe we’ll be able to see what we, and everyone else, needs to do next.