Sustainable dairy farming requires two things - higher prices and lower costs
20/09/05

The Tenant Farmers Association is using its presence at the Dairy Event at the National Agricultural Centre, Stoneleigh to give the simple message that a sustainable future for the UK's dairy sector will only come through increased milk prices and reduced costs of production.

TFA National Chairman, Reg Haydon said "Profitability is the key to sustainability and profitability requires higher prices and lower costs. Dairy farmers have worked extremely hard at driving costs out of their businesses and therefore it is galling to see some costs spiralling beyond the farmer's control. The cost of fuel, labour and compliance with an increasing burden of regulation are all on the up and there is little or nothing that producers can do to put the brake on."

The TFA is however reminding its members that there is one large cost that they can influence - rent. Following the TFA's successful "Rents Must Come Down" campaign of the late 1990's the TFA is again of the view that it is time for rents to fall.

"The process of rent reductions stalled with the agreement in Brussels to CAP reform in 2003. A "wait and see" attitude pervaded both the landlord and tenant communities and the service of rent review notices almost completely dried up. Any hoped for, upward price response in commodities has so far failed to materialise and looks set to remain a hope rather than a reality for some time to come. Indeed in most cases prices have worsened rather than improved evidenced by the price reductions announced by major milk processors. Rent now accounts for a much higher proportion of the earning capacity of let farms than it has done for some time and it is time for that to change. Tenants should take action now to seek reductions in unsustainable rents." said Mr Haydon.

As far as improving prices is concerned there are a host of issues which need to be addressed. These include, curtailing the power of retailers; amending the EU Sate Aid rules on promotion; improving country of origin labelling; regulating supermarket own brands; encouraging, developing and enhancing farmer owned brands and reforming levy bodies.

"All this takes time, energy, money and other resources. However, action is vital on all these areas if we are to succeed in ensuring the long term sustainability of dairy farming and the wider agricultural industry including the environmental and social structures it supports" said Mr Haydon.