NFU calls for urgent ‘crisis meeting’ with Eustice over dairy slump

• Some farmers are having to pour milk earmarked for the foodservice sector down the drain

• Increasing price volatility in global markets has also left processors under pressure

• The NFU believes at least 2,000 dairy farmers may now be suffering severe financial strain

The NFU has called for a “crisis meeting” with environment secretary George Eustice in response to the worsening crisis in the dairy sector.

With farmgate prices plummeting and some farmers having to pour milk earmarked for the foodservice sector down the drain, the survival of many British dairy farming businesses depended on “urgent action from the government”, the NFU warned.

The almost complete loss of the foodservice and hospitality markets in the wake of the coronavirus lockdown, as well as increasing price volatility in global markets, had left farm businesses and processors under increased pressure, it added.

“This has led to some dairy farmers with no other option but to dispose of milk on farm,” said the union.

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The NFU’s concerns were echoed by its colleagues in the Ulster Farmers’ Union, which cited recent figures from the EU milk market observatory showing a major downturn in prices.

The UFU said there had been an “alarming drop” in Dutch commodity prices this week, with butter down €500/tonne, or 23% since the start of March. With skimmed milk powder down 26% during the same period and mozzarella falling by 16%, farmgate milk prices would inevitably come under further “significant pressure over the coming days, weeks and potentially months”, it said.

“For weeks now, we have been flagging to government in our daily calls the issues within the dairy sector and working with Defra to try and find solutions,” said NFU president Minette Batters.

“But the situation is becoming untenable. Only four weeks ago all of this milk was being used. Losing businesses at this stage will leave consumers reliant on convenience stores and other difficult-to-reach outlets not being able to have access to the same supply of milk.”

The NFU believed at there may be at least 2,000 dairy farmers now suffering severe financial pressure, Batters added, with that number “growing by the day” as a result of the impacts of the coronavirus outbreak.

“As things develop very few dairy businesses will be left unaffected. We need to move fast to mitigate the impacts of this unfolding crisis on dairy farming businesses across the country,” she warned. She urged Eustice to “take urgent and decisive action, before it is too late and many of those iconic dairy businesses go to the wall”.

The NFU’s concerns mirror those of Dairy UK and the Royal Association of Dairy Farmers over the past week, who both called for a government intervention package for the sector.

A key issue for farmers and processors was that they were generally unable to access the Treasury schemes designed to help businesses through this crisis, suggested NFU dairy board chairman Michael Oakes.

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“We cannot furlough staff or stop milking cows, and things like business rate holidays don’t apply to us,” he said. “We need Defra and the Treasury to work together to extend these schemes so that they can be utilised by everyone in the dairy sector.”

The NFU’s key asks of government are:

• To allow access to the government’s Retail and Hospitality Grant scheme (or the creation of something similar specifically for the dairy sector) – which provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000.

• To engage with the EU Commission about schemes such as private storage aid, production reduction and market promotion to help restore confidence in the market and prevent adverse publicity related to disposal of milk. Government should also ensure public procurement for bodies such as the NHS, military and prisons all source fresh British milk.

• Defra to urgently convene with key stakeholders and help manage flows of milk through the supply chain.

In response, a Defra spokesman said it was working very closely with farmers and processor representatives to understand the specific challenges that the dairy sector was facing.

“Frequent discussions with the dairy supply chain will continue through this crucial period to understand what further support the sector needs,” he added. “We have been working closely with the NFU and other stakeholders, and the secretary of state will also be speaking directly to the NFU president to discuss this matter further.”