Tough times

It has been quite a start to the year for dairy farming. Over the last 12 months we have all watched the wholesale milk prices plummet and it is still going down. Some farmers lost 3.5p a litre in a month and we have recently been issued with another 1.5p cut after a 1p cut last month. To put that in perspective every penny is worth £10,000 a year across the whole herd. But we are one of the lucky ones, some farmers don’t have a contract and have to rely on a straight market price which is much worse. So whilst we now lose money for every litre we produce we are not losing as much as some other people.

It is too much for many, another Essex dairy farm sold up last month and we have heard of another 4 or 5 going in east Anglia too. It is so sad to see the animals going, when you have spent your whole life building your herd and suddenly they have no value to anyone.

There are lots of complicated reasons why the price has dropped and I am far from an expert in these but it seems a range of factors from international markets and demand changing. China started importing a lot as their economy grew and it is not so good now, I was told by someone Russia have stopped or reduced EU imports and at home some places sell milk as a loss leader for less than it costs to produce. In the better times some people expanded giving more supply and the problem with dairy is it is like turning a super tanker. You can’t just turn cows milk off or moth ball them until better times.

The sad fact is that the market will rebalance as so many farms go out of dairy there will at some point be less supply and prices will rise again. The challenge is to keep going until we can break even again, and not be one of the ones going out. Our cows perform in the top 10% in the country so we can’t be much more efficient, we can’t scale up as we are a small farm surrounded by development so becoming more self sufficient and selling some of our milk direct is our only survival option. It wasn’t why we started the dairy, that was always for me to have a new role and come home to the farm but now it might be what helps us keep the cows in the fields.  We hope to be selling some of our milk soon.  So watch this space for further details.