As the milk price row continues to steal headlines up and down the country, Alastair Carnegie - managing director of Cornish energy broker Total Energy Solutions - spoke to two of his dairy clients about life on the front-line.
As businesses we all need to control costs in order to maximise our margin, never more so than in the current economic climate.
This is particularly true for our hard-working dairy farmers who face the additional angst of an on-going price row and over-supply of fresh milk across the UK.
Talking to our dairy farming clients in past weeks, the milk crisis and what should be done to help is never far from the conversation.
At Total Energy Solutions we are proud to work alongside so many hard-working businesses in the region and feel that, as a community, we should do all we can to support our farmers on the ground.
This week I spoke to Toby Roskilly and Shirley Bruna, two Cornish dairy farmers about how they are coping during the current crisis.
Shirley runs a herd of 200 mostly Holstein cows from her farm St Alston Farm near Callington, supplying milk to Dairy Crest to turn into Davidstow or Cathedral City cheddar.
To support the business, a few years ago Shirley decided to diversify and launched ‘Trax and Trails’, an off-road driving centre, which she says is proving “more important than ever”.
She said: “The bottom line is that the survival of many family farms are at stake. It isn’t feasible to continue indefinitely with the income each month being several thousands less than the basic business outgoings; by this I mean cow feed, rent, insurance, repairs, bank charges etc.
“Dairy farms and all their animals have already been sold due to this volatile time and there will be many more to follow. This doesn’t just affect the farms but the wider rural communities that depend on farming for their own survival such as machinery dealers, feed companies and vets.
“We, and all other dairy farmers, have seen a massive cut in the price of our end product which is not sustainable. With the figure of 29-30p (per litre) being widely accepted as cost of production many are now only achieving approximately 23p.”
Last year Shirley invested considerably in upgrading the farm, introducing a new dairy barn, modern energy efficient milking equipment and ‘cow friendly’ mattresses and rubber matting for her herd.
“This was only after several years of planning, our goal was to see a secure a sustainable future for our business and to ensure our son could continue dairying.”
She added: “We feel that the supermarkets could do more by not treating dairy products as ‘loss leaders’ or putting them on the 2-4-1 cut price schemes. It’s not just milk we are talking about but the whole spectrum including cheese, butter, yogurt etc.
“When bottled water can cost more than milk I think there is something very wrong!”
From Callington, a two-hour drive down into Cornwall and you reach St Keverne, near Helston.
Tregellast Barton Farm has been in the Roskilly family for more than 60 years. In the mid-eighties, with the dairy declining in value, the family had to think of alternative ways of using the organic milk produced by its herd of Jersey cows. It was in 1985 that they tried their hands at making Cornish ice-cream and the firm has been expanding its produce range ever since.
Toby said: “Right at the moment it is not affecting us as all of our milk goes into ice-cream, but as of September and October it will.
“We put 500,000 litres of milk into our ice cream and fudge which we add hugely to the value by turning it into ice-cream. However, we won’t be using as much soon so will be sending away 150,000-200,000 litres to Arla.
“We have managed to insulate ourselves by using the milk ourselves and adding value to it. It has taken us 20 years to get to the situation where we are not affected so badly by the prices, but it has taken huge effort and investment.
“The biggest problem is farmers never know how much they’re going to get for their milk next year. Try running a business not knowing how much income is going to be coming in.”
Should more milk farmers begin to look at diversifying?
Toby added: “It is really hard to say. If every single farmer set up that way, 99 per cent would fail. We had the skills in our family and not every farmer is going to have that, and that was 25 years ago. The world was slightly different then. It wouldn’t work in every situation.
“It is all down to marketing, we have got to build up milk more. For some reason milk has become this thing that gets pushed to the bottom of the shelf and sold for bottom price. We need to look at the reputation of milk and not sell at rock-bottom price.”
“There is no simple solution. More could be done on the marketing of milk and how it must not be used as the lowest possible common denominator. I find it difficult to understand how a bottle of milk can be sold for less than a bottle of water.
“It is down to the supermarkets, down to UK milk industry and how it is sold altogether, how it is advertised. People have been able to do a lot of good work with advertising.”
Here at Total Energy Solutions we do all we can to minimise the energy costs for our dairy clients, as with all our clients. I also believe that, as consumers, we can all do our bit to help. Here are a few simple steps that we can take:
- Choose a retailer that support British farmers
- Buy local-produced milk and milk products
- Or, look out for the Red Tractor logo which means it can be traced back to a British farmer
- Spread the word and encourage friends, family and colleagues to ‘think about what they drink’ and choose fresh milk