Source: Yorkshire Post {Main}Edition:Country: UKDate: Saturday 31, January 2015Page: 13Area: 989 sq. cmCirculation: ABC 35940 DailyAd data: page rate £13,231.68, scc rate £21.48Phone: 0113 243 2701

Keyword: Hallam University

“ f f d d d ll h h b d k h h d

COUNTING THE COST OF DAIRY PRICE COLLAPSE

Wayne Martindale

SATURDAY ESSAY“WHAT’S THE price of a pint of milk?” used to be a question posed by reporters to stump the rich and powerful. But now, with the crisis in farming today, everybody is talking about the price of milk, which has dropped to around 25p a pint.

This seems unsustainable and illustrates the complexities of modern food supply chains. For while we cannot be asked to pay more for food when food poverty is a real issue in our society, at the same time we can’t let world-class businesses fail because of unfair pricing. Consumers should be aware of who is calling for the increase in whole milk prices and, if there is unfairness in the supply chain, we must do our best to put that right.

In the current crisis, farms who are processing and delivering milk to customers have been most vocal and I believe they are most likely to directly benefit from any consumer price increases – without the industry obtaining those same benefits. 

This exposes what I believe is the most important issue and it is one that MP Anne Mcintosh raised last week with what she called “the indirect supply chain”, the voice of small

li h ll t

suppliers who sell to processors.The negotiating power of the smaller

business is the issue which has sparked the current crisis because of the failure of the company First Milk to make prompt payments following the

Christmas period. In reality, farmer-owned co-operatives are notoriously risky. Heritage is crucial here and relationships are often built on trust and fairness over many years. 

The current crisis has no doubt damaged relationships, but it has also raised the issue of fairness. The heritage of our region is on our side as milk from the North of England is enshrined in the myth of the “milk train” to London every morning. First Milk itself has deferred payments to reinforce its business financially. Seasonal risk is a reality of the business and support during this crisis is not an long-term answer for indirect supply chain issues. 

All of this has prompted the Prime Minister to ask the Grocery

Adjudicator to investigate and it will hopefully result in all dairy producers being part of negotiations on price with processors, whatever the size of their herd and production capacity. 

Smaller farms often have a limited voice in these types of negotiations and it is not as if we are dealing with an inefficient industry, with British farms being top-ranked globally, producing nearly 14 billion litres of milk each year with some of the best animal welfare standards in place on all farms by law. The adjudicator must provide a mechanism for fair pricing for all producers.

Local value is often put to us by producers who suggest we should only buy milk from where we live and ignore the areas of the country such

as Cheshire, Cumbria and Somerset where milk is produced very efficiently. I strongly believe that this approach is not reflective of the modern food supply chain and it is not a solution for the industry – it only helps a few. 

Pride in locality is important, but as I put forward in my book Global Food Security and Supply, we depend on a global supply chain for diversity of food choice. In reality, most of us will be eating locally because most of what we eat comes from the UK and closer European neighbours. Indeed, I led the Project Flow at Sheffield Hallam where 80 Yorkshire and Humber food manufacturing firms were studied, and around 80 per cent of all their food products stayed in the region. This study included several well-known

Yorkshire cheeses and ice cream brands we are very proud of. We eat locally and we like it – but we must have the opportunity to choose.

The move to engage the Adjudicator is welcomed but let’s not forget that milk is an ingredient for a highly diverse range of foods including creams, butters, and cheeses where it takes eight litres of milk to produce a kilo of cheddar. The UK produces nearly half a million tonnes of cheese and butter each year.

The dairy supply chain is going through a transition that reflects consumer trends and the need for producers to seek greater added value in dairy products. We have seen the emergence of enterprising farm-based producers but this opportunity will have a limit to growth because it is locally focused and ultimately we need to seek a fairer national supply chain. 

After all, milk may not be the product of greatest value but it is one ingredient the UK food industry

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Source: Yorkshire Post {Main}Edition:Country: UKDate: Saturday 31, January 2015Page: 13Area: 989 sq. cmCirculation: ABC 35940 DailyAd data: page rate £13,231.68, scc rate £21.48Phone: 0113 243 2701

Keyword: Hallam University

and consumers cannot live without. We have some of the best producers and we provide a great consumer experience, but we all need to be aware of the value of milk from British farms. British milk production should be something we are all proud of.

■ Wayne Martindale is a senior research fellow at Sheffield Hallam University and the author of Global Food Security and Supply, out now.

Situation urgent, warns MPAT THE mercy of volatile world markets, British milk prices have been plummeting for 12 months as rising supply outstrips falling demand, fuelled largely by China and the Russian trade ban.

The slump, which follows a short period when milk prices hit their highest level for several years, has seen the total number of dairy farmers in the UK fall by more than two-thirds since 2005 to below 10,000 for the

first time. North Yorkshire has lost 55 dairy farmers in the last year alone.

In a report published last week, the Parliamentary Environment, Food and Rural Affairs Committee urged the Government to intervene. It wants the Groceries Code Adjudicator’s remit to be extended to include dairy farmers.

The committee’s chairwoman, Thirsk, Malton and Filey MP Anne McIntosh has warned that the situation is urgent.

Reproduced by Gorkana under licence from the NLA (newspapers), CLA (magazines), FT (Financial Times/ft.com) or other copyright owner. No furthercopying (including printing of digital cuttings), digital reproduction/forwarding of the cutting is permitted except under licence from the copyright owner. All FT content is copyright The Financial Times Ltd.

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Source: Yorkshire Post {Main}Edition:Country: UKDate: Saturday 31, January 2015Page: 13Area: 989 sq. cmCirculation: ABC 35940 DailyAd data: page rate £13,231.68, scc rate £21.48Phone: 0113 243 2701

Keyword: Hallam University

SUPPLY AND DEMAND: The plunging price of milk may be welcome to cash-strapped consumers, but the immediate

consequence is a mass exodus of farmers from our world-class dairy industry.

Reproduced by Gorkana under licence from the NLA (newspapers), CLA (magazines), FT (Financial Times/ft.com) or other copyright owner. No furthercopying (including printing of digital cuttings), digital reproduction/forwarding of the cutting is permitted except under licence from the copyright owner. All FT content is copyright The Financial Times Ltd.

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