Special report: Is it doom for the Shropshire milk industry?
The milk price crisis which is battering Shropshire's farming industry is unprecedented, getting worse, and could doom the British dairy industry, experts have warned.
UK farmers are producing almost three million more litres of milk every day than they have on average over the course of the last three years, despite one of the main export markets for our milk disappearing.
Tit-for-tat sanctions imposed by Russia on imported food and drink as tensions in the Ukraine ramped up led to all exports of milk and milk-based products to the world's largest country drying up overnight.
This video is about getting milked
Posted by Rob Manford on Tuesday, 4 August 2015
With production running high and international requirements for milk dwindling, it's little surprise that the laws of supply and demand have had a serious effect on the price paid to farmers.
"The main driving force behind the fact the prices farmers are receiving has dropped, is a global imbalance of supply and demand," said Patty Clayton, a senior analyst at AHDB Dairy, a not-for-profit market intelligence organisation which provides support for British farmers.
Many Shropshire farmers find themselves in difficult conditions as market woes continue to have a serious impact on their businesses.
Further price cuts are difficult to stomach and too many of our members are telling us they are being paid 14p per litre or less – this is unacceptable.
For the NFU it is an important time to be lobbying decision makers and reinforcing the message about the impact of dire prices on farms, but for the wider industry it is important to work together.
Commentators and analysts continue to point to overproduction, but farmers are rightly quick to point to the consistent and steady prices that consumers can, do and will pay, when asked, for processed dairy products.
What's more the latest Government statistics show that the UK dairy trade deficit is still almost £1.2 billion, meaning the UK public consumes more dairy than UK farmers produce.
So while global overproduction is holding back commodity prices, here in the UK the problem is more one of processing and access to our own stable and profitable markets.
This very issue was one the industry and the NFU tried to address in 2013 and 2014 with strategic projects to get more British dairy products into higher value export and domestic markets.
These objectives to grow our share of the dairy product marketplace are still very important, particularly when we see competitors overseas investing heavily in innovation, efficiency and market development.
However, we are all too aware that for our members these lofty long-term strategic aims are little comfort when what you get back from the market doesn't pay the bills.
With this in mind, the NFU's food chain unit has had a comprehensive programme of supply chain meetings in the past months.
Our head of food chain unit, Ruth Mason, has been very busy ensuring retailers, food service operators and food manufacturers understand the impact of low prices and volatility on their supply base.
We also continue to meet with the banks, agricultural supply industries and others to see what can be done to ease the financial pressure on the sector.
The NFU will continue to fight for more British farmed food to end up on consumers' plates in higher value forms and for fairer trading terms and contractual conditions to help insulate members from the impact of commodity volatility.
