‘The hardest thing I’ve had to do.” That was the heartbreaking confession of a British dairy farmer after selling his herd of cows, bringing to an end a family business that had been in existence for nearly 200 years.
The reason for this fateful decision? A 14p-a-litre drop in the price he was getting for his milk, within a few months, despite facing continued high bills for electricity, animal feed and fertiliser. “I can’t understand why anyone would want to carry it on,” he said.
The milk producer, who has chosen to remain nameless, told his story to David Exwood, a Sussex farmer, who shared the comments on Twitter. His situation is far from unique. Dairy farmers and other food producers have been struggling with spiralling costs since the outbreak of war in Ukraine last February pushed energy bills skywards – also affecting the cost of fertiliser, which needs gas for its production.
Financial pressures were further exacerbated by last summer’s drought, as farmers had to buy more animal feed because of a lack of grass.
Milk shortages after the disruption of the pandemic eventually saw the wholesale price rise to record levels by late 2022, peaking at 51.6p per litre last December. This, finally, covered farmers’ costs and allowed them to breathe a sigh of relief. But the respite was short-lived.
The average farm-gate price for milk has been on a downward trajectory in recent months, sliding to 37.6p per litre in May, according to government figures. This represented an almost 5% drop in the space of a month, and a near-8% decrease on the same month a year earlier.
Paul Rowbottom, a farmer who also sells animal feed, says he can see the impact of financial pressures every day at the farms he visits across Staffordshire, Derbyshire and Cheshire. “Trying to get money in is a nightmare,” he says. “They can’t pay their bills.” He says the dairy farmers and other food producers he supplies are facing the worst challenges he has seen during 30 years in the job: “I don’t think I have seen so many people so fed up as now.”
Recent falls in the milk price have partly been attributed to the “spring flush” – when cows naturally produce more milk as they are let out into fields – leading to oversupply. Yet dairy farmers clearly feel that they take the financial hit when milk processors and retailers reduce the price paid for their product.
Cheaper milk, along with lower prices for butter and bread, has been among the price cuts advertised recently by supermarkets as they battle to win over price-conscious shoppers during the cost of living crisis and a period of stubbornly high food inflation. A four-pint bottle now costs £1.45 at grocers including Tesco and Sainsbury’s, about 20p cheaper than in early April, and the lowest price since before the pandemic.
Now food producers are warning that a continued exodus of dairy farmers could jeopardise the UK’s current self-sufficiency in liquid milk. Almost 5% of them left the industry last year, according to the National Farmers’ Union (NFU).
The Dorset Dairy Company has become one of the latest farms to decide to sell off its milking cows after the crash in prices. Dan Miller, the company’s head of operations, is the third generation of his family to oversee a herd at Stalbridge. He now intends to sell their 180 cows in September, after which the company plans to buy in milk from elsewhere to continue making its yoghurt, butter and cream.
Miller says he made the decision as a result of the volatility in the milk price, where the “happy days” of the wholesale highs in late 2022 prompted many dairy farmers to expand, just as consumers reined in their spending. People are also gradually changing their milk habits – whether that’s cutting back on traditional cups of tea or morning cereal or the rise of dairy-free alternatives.
Miller believes the industry has struggled to adapt quickly enough, with small suppliers the most vulnerable. “With milk you can’t turn off the taps easily,” Miller says. “A lot of people said ‘let’s improve and grow and produce more milk.’ We should have been more cautious.
“This is an epic cycle and I don’t see it getting better quick enough,” he says, explaining why he is selling his herd. “We don’t know how long this is going to last.”
Farmers across the country are asking themselves how long they can hold on amid financial pressures, as they continue to grapple with chronic labour shortages. Almost three-fifths of dairy farmers belonging to Arla, the UK’s largest dairy cooperative, complained of worker shortages in a recent survey, saying they were finding it harder to find staff than in 2019.
Andrew Hall, a beef and dairy farmer from Alveston in Warwickshire, has also experienced this. Of his four children, the oldest two have already studied at university, and decided that they don’t want to take over the farm, while workers “who are my age and older are saying ‘I’m sick of this,’” he says.
“I am finding it tough financially and mentally, and obviously labour is a massive issue,” he says, adding that he is receiving 15p less a litre than in February. “Most dairy farmers are working seven days a week, but it’s 2023, not 1983 or 1973. And we have been left behind with wages.”
The 56-year-old is also going to miss out on his one week-long holiday of the year, as his “relief milking” assistant is recovering from a road accident. “I can’t find anybody else to milk,” he says.
To keep on top of his outgoings, Hall has reduced the amount of feed given to his cows and is scaling down production, relieved that there is more grass available than last summer. “You never hear of farmers striking,” he says. “But we have been taken advantage of for too long.”
Succession problems are among the reasons for a large number of dairy herds coming to market at Kivells, an agriculture and livestock auction house. Mark Davis, an auctioneer based in Exeter, is expecting to sell 1,500 dairy cows over the next month. “We are seeing a lot of sales come forward,” he says. “The milk price and finances are bound to have an effect.”
Davis, who also works part-time on the family dairy farm run by his brother, believes the reluctance of the next generation to take over family businesses is also playing a role. “The sales coming up are generally because of retirement, a couple have been in ill-health, in one the farmer died and the family didn’t want to take it on.”
Some farmers are pinning their hopes on the government’s plans to introduce new regulations in the coming months, and bring more stability to the dairy supply chain. The so-called dairy code is intended to “ensure supply contracts in the dairy sector are fair and transparent, with farmers being paid a fair price for their produce”, according to the Department for Environment, Food and Rural Affairs (Defra).
The regulations are designed to allow farmers to challenge prices offered by processors, and prevent contract changes from being imposed on producers without agreement, while allowing them to raise their concerns more easily.
Michael Oakes, a dairy farmer in Worcestershire, is hopeful that the plans, expected to become law in the autumn, might “take out some unfair practice from the supply chain”. He believes that the current situation, where farmers sometimes only find out a few days in advance what they will be paid for next month’s milk, is untenable.
Oakes, who is also chair of the NFU’s dairy board, hopes the regulations could “create a new relationship with processors, get rid of the ‘us and them’. We need each other, but it has never felt like a true partnership.”
For now, dairy farmers such as Hall are committed to remaining in farming, even though he admits that he occasionally dreams of a life without caring for a dairy herd. “I could rent out buildings [on the farm] for storage, and have an easier and better lifestyle.”
