Back
to SOCIAL/ECONOMIC/POL|ITICAL| Homepage
Reality kicks in as shortages bite
Eddie Gillanders
Editor, Farm North East
Filed 16 May 07
©Edwin Gillanders
This article was originally published
as a Leader in the
April issue of Farm North East.
It is reproduced here by the kind permission
of its author and of the journal
The news that Tesco is lifting the ex-farm
price of milk by 3-4p/litre to 22p/litre to 850 dairy farmers on
direct supply contracts is long overdue and is to be welcomed. It
will restore some much-needed confidence back into the industry
and is a move which will force the hand of other supermarkets.
Hopefully, with two or three producers a day quitting
dairying, supermarkets have got the message that future supplies
of milk are at risk. But, call me a cynic if you like, let’s
not kid ourselves that the extra £25 million to be paid to
dairy farmers will be coming off big-hearted Tesco’s bottom
line, as the Tesco spin machine would have us believe.
Tesco has already raised the retail price of milk
by 2p/litre in preparation for this move so the money will be in
the bank before the price rise to producers kicks in and Tesco will
continue to make obscene profits from selling milk. And they will
be seeking to tie producers in for the time – not long a-coming
– when milk prices escalate because of shortages.
Sadly, the welcome dose of reality from supermarkets
has come too late for two of the North-east’s most prominent
producers who have announced their decision to quit dairying.
If Moray dairy farmer, Dean Anderson, Mayne Farm,
Elgin, with one of the highest yielding herds in the country (and
winner of the RABDF Gold Cup for the top dairy herd in the UK in
1999 and 2000), is struggling to make dairying pay, what chance
have other dairy farmers?
Dean and his son, Andrew, will be selling their
entire herd comprising 650 Holstein cows and young stock, at a two-day
on-farm sale at Plewlands, Rothes, on May 22 and 23. The quality
of the cattle, all pedigree and milk-recorded, is certain to attract
buyers from all over the UK, and from the Continent, and Dean is
relieved that the price rise has come just in time to instil a bit
of confidence into buyers.
With high yields, and bonuses for quality returning
an average milk price last year of 22-23p/litre, the herd wasn’t
losing money but the Anderson’s feel they are simply not making
enough to compensate them properly for all the time and effort which
goes into producing milk, seven days a week, 365 days of the year.
All dairy farmers will echo that view.
The Marshall family – of Marshall Trailers
fame – are also giving up the unequal struggle and getting
out of dairying at Concraig, Kintore. Most of their 400 cows have
already been sold privately although they are leaving the way open
to come back by only moth-balling their dairy unit.
Father, Charles Marshall, never a man to mince
his words, says he would need a price rise of at least 5p/kg to
tempt him back although he might have held on if had had an inkling
six months ago that a price rise was on the way.
Dairying has borne the brunt of the cost-price
squeeze in recent years but Brian Pack, chief executive of ANM Group
Ltd, has warned that beef production could go the same way if action
is not taken to arrest the decline in the suckler beef herd which
seems to be gathering momentum.
Latest suckler herd to come under the hammer is
the Simmers family’s herd at Backmuir, Keith, which will give
Aberdeen and Northern Marts their biggest ever sale of beef breeding
stock on May 30 – the day before Beef Tech 2007 at Savoch,
Lonmay - with an offering of 500 cows with spring-born calves and
180 cows with autumn-born calves, plus 20 Limousin and Belgian Blue
stock bulls.
The family say they are restructuring their livestock
enterprise to develop other aspects of their farming business but
the loss of this top-quality herd is a big blow to the North-east.
All the financial analysis point to the fact that,
despite higher beef cattle prices, only the Single Farm Payment
is keeping beef breeding herds in business. Family farms might soldier
on but it will be different on farms dependent on paid labour.
Any decline in the suckler herd is serious for
companies like ANM Group but it is equally serious for the whole
of the rural economy and downstream activities such as meat processing.
The failure of Scotland’s newest abattoir at Linlithgow and
the loss incurred by Scotch Premier Meat last year is a dire warning.
Ireland has found a way of supporting its
beef breeding industry and it is something the new Scottish Parliament
– whatever its complexion – must address as a matter
or urgency after the election on May 3.
©Edwin Gillanders
Editor, Farm North East
|
