Farmers in debt and despair as dairy market collapses

Supermarket wars and Russia's ban on EU produce have seen tumbling milk prices and stockpiled cheese supplies. Rachael Pells reports on an industry near crisis

British dairy farmers are threatening to take matters into their own hands as fears grow that volatile markets for their milk, butter and cheese products could jeopardise their livelihoods. Some larger dairy farmers are said to have incurred debts of more than £1m since milk prices first began to plummet in May.

Caught between a UK supermarket price war and a ban by Russia on EU produce, including dairy, which many fear could lead to a glut in Europe, dairy farmers are being asked to take action to help save their industry.

In an attempt to wrest control of the falling market, Farmers for Action, who staged the 2012 SOS Dairy demonstrations, has asked its members to support direct action to be taken by the end of this week. Within 24 hours of consulting its membership, the group received more than 500 "yes" votes, with farmers from around the country expressing grave concerns over the future of UK farming.

Welsh dairy farmer David Handley, chairman of Farmers for Action, said: "We're producing more and more milk on a daily basis and we've no market for it. We've now reached a point where we're about to fall off the edge of a cliff and the situation is dire.

"By the end of the year, we expect milk prices to fall by as much as 3p per litre, which will have a devastating effect on the whole industry, not only for dairy farmers but for the 25 to 30 areas of business that are directly associated."

According to Mr Handley, national dairy processors and unions such as the NFU are to blame for the impending crisis, after they instructed farmers to increase production levels in order to compete within the growing global market.

He said: "The NFU told us that Russia is going to be a panacea, China is going to be a panacea – that we have to produce every litre of milk we can supply because they are going to buy it. But, of course, it's all fallen through.

"We feel very let down by the unions. I know farmers who have racked up over £1m in debt since milk prices dropped in May."

The bleak economic outlook for farmers is being exacerbated by a Russian ban on EU produce in retaliation for Western financial sanctions taken against it for its involvement in Ukraine. President Vladimir Putin issued a "full embargo" on fresh produce, including meat, vegetables and dairy, prompting fears over what would happen to the large quantities of unwanted supply. Dairy produce is expected to be hit hardest and cheese is already being stockpiled in Europe.

The ban comes as UK supermarkets cut the price of milk in an attempt to keep or win back market share. As a result, the average price of a pint of milk is 50p, according to comparison site MySupermarket.co.uk.

Waitrose was the latest supermarket to reduce its milk from £1.39 to £1 for four litres, following Tesco, Sainsbury's and several other competitors.

The UK market is experiencing its highest surplus in milk since 2012, when farmers protesting against falling supermarket prices blockaded processing plants and threatened to tip milk down drains.

Phil Bicknell, chief economist for the NFU, said: "The UK dairy industry produces around 13 billion litres of milk per year, making it quite a small player in the global market. The bigger risk for us is what might happen to prices in the UK if products begin to stockpile. Trying to find a home for unwanted products can affect the supply and demand, which is fragile in agricultural markets. Recently, we have seen some shifting dynamics in the dairy market globally and that has put downward pressure on commodity prices.

"It is safe to say that we are worried about the supply and demand dynamic, and the Russian ban is something else to throw into that mix."

Life and Style
ebookNow available in paperback
ebooks
ebookA delicious collection of 50 meaty main courses
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Food & Drink

    Recruitment Genius: Personal Trainer / PT - OTE £32,000 Uncapped

    £22000 - £32000 per annum: Recruitment Genius: The fastest growing fitness cha...

    Recruitment Genius: Membership Sales Advisor - OTE £10,000 Uncapped - Part Time

    £7500 - £10000 per annum: Recruitment Genius: The fastest growing fitness chai...

    Guru Careers: Marketing Executive / Digital Marketing Executive

    COMPETITIVE: Guru Careers: A Marketing / Digital Marketing Executive (CRM, Eve...

    Recruitment Genius: Receptionist / Sales / Customer Service Assistant

    £8 per hour: Recruitment Genius: The role is likely to be 4on 4 off, days and ...

    Day In a Page

    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones