Sizeable investment by processors, improved milk prices and better contracts are all signs the dairy farming industry has reason to be cheerful, according to a North East dairy board member.
Dennis Gibb, of Ponteland, made the comments following the NFU’s fifth annual Northern Dairy Conference, the take-home message of which was that the sector has reason to feel more positive and confident about its prospects.
The event heard this year from Ash Amirahmadi, vice president for Milk Member Services with Yorkshire-based milk processor Arla Foods; Gordon Whitford, northern area manager with HSBC and Amanda Ball, head of marketing and communications with DairyCo, and NFU national Dairy Board chairman Mansel Raymond.
All four speakers focused on positive drivers for the dairy sector, highlighting the potential for more milk to be produced, opportunities to build business skills, an enthusiastic and supportive public and an improved trading environment.
Mr Amirahmadi provided a comprehensive assessment of the global dairy market, emphasising the level of capital investment being made both in Europe and further afield in anticipation of a surge in demand for dairy products.
Reporting that by 2020 his company would be looking to source five billion litres of milk from the UK alone, he said Arla was also looking to invest in its brands with the aim of providing greater returns to Arla Farm Partnership members.
According to Mr Whitford, HSBC sees agriculture in a very positive light and is keen to support dairy businesses. He highlighted the emergence of new export markets as another positive indicator for the sector, with opportunities there for business-minded farmers to exploit.
Amanda Ball reported not only growing support from the public following on from high-profile campaigns but also international faith in the integrity and quality of British products. Mr Raymond said the months of hard work by the NFU and the Dairy Coalition had delivered a better and more transparent contractual environment for farmers.
“We now have more choice than we have ever had on contracts, including the possibility of ‘Cost of Production +’ contracts,” he said. “But of course there is still more to do and we are now looking at how to encourage fixed price options going forward.”
Among the positive messages, though, there were warnings to dairy farmers about the likely impact of interest rate rises and exchange rate changes, as well as increased volatility post quotas both in terms of milk price fluctuations and farmer costs of production.
The impact of forthcoming CAP reform and the threat from Bovine TB were also highlighted, and in planning for the future, farmers were advised to look for ways to work collaboratively.
Speaking after the conference, Mr Gibb said it was great to see so much positivity in a room full of dairy farmers. “For the last ten to 15 years dairy farming has seen little if no investment, confidence has been low and we have seen many farmers quitting the sector,” he said.
“We have been hearing for some time that global demand was set to increase but somehow that failed to increase confidence at grassroots level. Now, though, we are really beginning to see sizeable investment by processors, milk prices are improved and contracts are also better, so all the signs are positive.
“Of course there is still work to do and there are concerns that we need to take on board but it is easier to face those challenges if we are convinced that dairy farmers have a long-term future.”