Dairy farmers must embrace change and opportunities
11/03/05

RABDF conference: British dairying facing the future, getting at the facts

Dairy farmers must embrace change by turning the massive challenges presented by MTR and the changing global framework to their advantage. Those were the key messages emerging from the Royal Association of British Dairy Farmers National Dairy Conference staged in Cheltenham, in association with NatWest and the Dairy Supply Chain Forum.

“Our industry needs to turn from introvert to extrovert, to shorten the supply chain, to invest in modern processing, and to add value,” commented Westbury Dairies' chairman, Sir Ben Gill. “The UK dairy industry must leaf frog ahead, forge alliances and develop export markets, for example to the 2m British households in Spain, the growing ex pat population in Turkey and exploit opportunities freed up by exporters supplying China,” he said indicating Westbury was considering making payments to suppliers based on butterfat and solids to enable the processor to manufacture higher value products.

Dairy Crest's Mark Taylor argued that developing strong brands added value, however they took time and investment. “Establishing a long term collaborative relationship between producers, processors and retailers to achieve a shared objective would be more beneficial,” he said citing the company's recently launched initiatives with two multiples Waitrose and M&S, each offering producers a premium.

Turning to farm gate level, NatWest's Ian Kenny argued: “Farmers have been burying their heads in the sand and placing too much reliance on not knowing MTR details, when in fact they need to change their mindset and seek out the opportunities. For example farmers receiving their SFP in €s will help offset interest incurred on borrowed sterling due to the current 2.5% currency rate differential,” he said. “There are plenty of borrowing opportunities with UK base rates at 4.75%, an all time low for more than a decade. There is still tremendous room for improved technical performance as one third of dairy producers are currently inefficient. Shaving 10% off both fixed and variable costs will automatically double their farm profits.”

He added: “Whatever the approach, there is going to be public focus on the way payments are spent,” he said. “We put a lot back into the community, but not enough. We need to be more vocal about what we provide, for example by quoting the number of nesting birds on each farm.”

Explaining Defra's cross compliance programme, Duncan Forbes said meeting the basic requirements was possible for most dairy farmers to achieve. “They must all consider the Entry Level Scheme. Accumulating 30 points/ha to qualify for an additional payment of £30/ha is within most farmers' reach. In comparison, the Higher Level is competitive and targeted at those farms with features worthy of extra protection.”

He argued one of the biggest issues is supplementary feeding on swards with less than 25% ryegrass, and the answer lies in rotational feeding to prevent concentrated poaching. Oxfordshire producer David Christensen said this problem had been overcome on his 480 cow unit by simply chaining together a handful of feed troughs and welding runners to their base to facilitate movement. He said: “As cross compliance stands, we don't have much to fear, the new regime has led me to take the view he we have a 'new' customer to a sell a service to - the taxpayer, and like in any business the customer is always right.”

Clive Gurney was among the conference's three farmer speakers determined not to use their SFP to subsidise production. “Why give your SFP to the milk buyers and lose this opportunity for change?” he said. He had been meeting the environmental challenges on his family's 280 cow Herefordshire based unit 'before they occurred'. “Hedgerows, green lanes and wet lands have been developed in the last three years under the Countryside Stewardship Scheme to increase the business's capital asset, generate enthusiasm for wildlife among our staff and encourage a superb new understanding and kinship with our non farming neighbours.”

Lyndon Edwards explained his SFP was contributing towards the finance needed to convert farm buildings for commercial use on his 400 acre organic unit near Chepstow. “There are opportunities, but you have to put in the time and effort, and have the drive and enthusiasm to understand where you are going,” he said.

Cross compliance was referred to as 'a walk in the park' compared with what's to come under the European Water Framework Directive 2000 by NFU's Maeve Whyte. “I cannot over emphasise how massive the impact this directive will have on the dairy sector from which originate 43% of all agricultural pollution incidents,” she said. Excess Nitrogen, Phosphorus, silt, herbicides, pesticides, slurry and dirty water were all to blame.

“The directive requires good water quality, so action will need to be taken on almost every farm to reduce diffuse pollution through what is termed catchment sensitive farming. A decision will be announced in Europe in late 2006 on the standards applicable to clearly defined areas throughout the UK and categorised by rainfall, geology and natural features. However every farmer needs to get involved now to prevent additional swingeing impositions, including tax on fertiliser and other inputs. Joining Entry Level and High Level schemes will help along with various Environmentally Sensitive Farming initiatives nationally.”

RABDF's chief executive, Nick Everington added: “Dairy farmers must look to develop income from all the assets on their farm and not just continue to rely on money solely from milk. If you intend to stay in the dairy industry you will need to meet and overcome the commercial and environmental challenges ahead. As an RABDF member the association can help you achieve this to become a successful businessmen as well as a progressive dairy farmer.”