Farming News - NFU announce drive to entice dairy investors

NFU announce drive to entice dairy investors

05/04/2011

NFU Scotland announced this morning that it will begin a drive to invite dairy processors to look at investment opportunities in the country. The news comes as rising global dairy prices mean some regions are benefitting while others continue to struggle; the union believes that by increasing the value of its dairy produce by making cheese and butter it can secure a better deal for Scottish producers.

NFUS vice-president Allan Bowie said the move was made as the union could see other countries’ dairy industries benefitting from rising prices while those in the UK industry remain locked into a cycle of supplying raw milk at artificially low prices. Proponents of the bid say that, if it is successful in stimulating interest, new investments could improve returns for farmers and go some way towards reducing the UK trade deficit in dairy products, which currently sits at £1.3 billion a year.

Bowie hailed February’s partnership between UK cooperative First Milk and European supplier Eilers & Wheeler as a step in the right direction. The partners have pledged to establish an ‘international contract’ which will see farmers receiving 28.5ppl (pence per litre); although this would be an improvement for producers, it is still 0.5p below the cost of production.

Yesterday, the vice-president told The Scotsman, "Despite the availability of cheap milk to processors here in the UK - the cheapest milk in virtually the whole of Europe - this trade deficit has grown rapidly. We import 90,000 tonnes of butter, while we consume 179,000 tonnes and we bring in 411,000 tonnes of cheese, while consuming 673,000 tonnes.

“We have the producers and the production here in Scotland that could meet the requirements of any processor looking to tap into the growing demand for milk and dairy products. We can make cheese and butter, we can make other added-value and commodity products and we can produce the milk, so why the lack of ambition?"

Australia’s artificially low prices reflected in farm sales

Whilst in the UK the NFU Dairy Board and NFUS have devised strategies to secure a future for their industry, elsewhere in the world farmers are not so optimistic. The ongoing battle over artificially low milk prices between supermarkets and producers in Australia may have an adverse effect on the rural property market.

In the latest blow to Australia’s beleaguered dairy farmers, yesterday (4th April) it was revealed that low milk prices, which continue to squeeze farmers’ margins, will push a glut of dairy farms onto the market as farmers can no longer cope.

Queensland will be the region hit hardest; since deregulation in 2000, the number of dairy farms in Queensland has dropped by around 60%, falling from 1550 to 580 in the last decade. However, business newspaper the Australian Financial Review reports that much of the land will not be sold as it is too steep for arable and too small for beef farming. One estate agent from Northern Queensland said “it will be impossible to sell a dairy farm here.”

Commenting on the situation, John Cochrane, Gympie Regional Realty principal and dairy farmer, said the value of the land is going "down, down, down", a statement which ironically echoes supermarket Coles’ campaign to lower prices. Cochrane admitted, "I'm really concerned about what's happening – I don't think anyone wants to farm anymore."