A need to make sure milk contracts mean something

Not since foot-and-mouth, in 2001, have we experienced the like. In fact, Dr John Locke, NFU Scotland’s Stewartry branch chairman has said we should treat coronavirus like a human form of F and M.

Farmers are probably in one of the best professions for self-isolation. We do it every day.

But, that makes it harder to believe, as you look out across a sunny field within your home boundaries, that we are in the midst of a global pandemic.

That said, daily life is certainly not going on in the way we know it. And no-one is immune – it has already affected Royalty and the Prime Minister. So please observe government advice – minimal movements and no mixing.

Already there have been many victims. Events we look forward to every year have been cancelled, some with huge financial implications.

One of those is of course, what would have been the 180th Highland Show. The announcement came as the keys were handed over for its new multi-million-pound events space and members’ area.

This state-of-the-art facility was finished ahead of schedule, but alas we will have to wait another year before we can experience it. The sad likelihood is we will see businesses, especially smaller ones, go to the wall.

I’m entries secretary for West Fife Show, which has, of course, been cancelled. We managed to call it off before schedules had been printed or posted, so at least saved some money.

Other shows won’t have been so lucky. The last event I attended was the Dairy Expo at Carlisle – a week later and it would have been an entirely different story.

It’s during times like this, though, that farmers prove how resilient and resourceful they can be. People were quickly in to panic buying, leaving supermarket shelves empty, particularly of bread and milk. (I did notice though the milk alternative shelves remained well stocked!)

People are working from home and as result milk sales went through the roof. Alas Government measures brought in to control Covid-19 has resulted in the closure of restaurants, cafes and the like, leading to a reduction in the demand for milk and other dairy products.

It’s estimated 1m litres of milk is being produced per day that has no home to go to. Sorry to add insult to injury. but if you look back this figure could double next month as the spring flush hits its peak.

There are almost 28m households in the UK and while instant coffee or tea uses around 25 ml of milk, a latte or cappuccino from a high street chain will use six or seven times that level per cup. It doesn’t take a genius to work out that that’s a huge drop in consumption.

The industry is trying very hard to redirect this milk, but unfortunately there is just too much. Some producers are being asked to cut production by 3%.

My worry is that as we adapt to this and everyone produces less in whatever way they can, what happens post-crisis. Can we ease production enough in the short term without damaging the long term?

Levels will return to normal and maybe we won’t be able to meet the demand, which could lead to more imports. Perish the thought.

Trying to produce less milk has its own problems, without the added struggle of the notorious spring flush.

The weather has been fantastic of late and I’m sure everyone will be keen to get cattle to grass. This made me wonder what our NFU are doing to help our situation.

I read the milk committee chairman’s blog, which by the way makes interesting reading. Gary Mitchells’ opening remarks made me sit up and take note.

He was in a meeting last month with the other UK unions and Defra discussing a consultation paper that was going to be released this month, which was looking for action in tightening up on milk contracts.

Way back in 2012, NFU Scotland called on milk processors and their representative body, Dairy UK, to recognise and operate to the voluntary Code of Practice. The code was agreed by the whole industry and signed by key parties.

It’s quite a read and there is a lot of information to take in, so much so your eyes begin to cross over. My understanding, though, is that it was to set out good practice for contracts between producers and purchasers.

It agreed to address a number of long-standing issues with contracts in a way that worked for both sides. However, that word – voluntary – was the biggest issue. How effective can something be if it’s not mandatory?

Meanwhile, gurus within government have split the Covid-19 virus into four major stages: response, reset, restart and recovery. Once we are in the recovery position, a 12-week consultation on the thorny issue of milk contracts will begin.

This will probably be the most important decision you make since deregulation in 1994. It is critically important you have your say on the future of your contract. Watch this space.

This makes you wonder how it would be if you were a Freshways producer. I certainly don’t think Freshways signed up to the vCoP. Are their contracts worth the paper they are written on?

Farmers have been forced to dispose of milk on farm after the company told them at short notice that collections would be delayed. And we’re not talking a few hours delay here ... we’re talking not at all for some days.

Plummeting demand has forced the dairy processor to cut its milk price by 2ppl and delay payments. All supplies are to be paid for in a monthly period 45 days from month end, leaving farmers waiting until mid-May for milk produced in March.

The company said it’s being forced to sell milk on the spot market – which has crashed to 5-10 ppl delivered. How would you like to be in that position? Businesses are being put at risk through no fault of their own.

As dairy farmers, we have a big challenge ahead, like no challenge ever before. As Gary said, if we assume the virus comes under control in the same timescales as China, then the management of both milk supply and demand in the next 12 weeks is crucial.

We have his assurance that he and everyone involved are doing everything they can to work in the interest of members. Apologies, Gary, if you get a backlash from this!

One thing before I sign off. This pandemic is forcing us to re-evaluate, restructure and change how we function as a community. Will it be Covid-19 that shapes this country’s future, rather than Brexit?

Agriculture is a vital industry and any Government going forward must allow farming to flourish and feed the nation. We are all in this together and together we WILL come through it.

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Thanks – and stay safe