‘We’re in Survival Mode’: The Milk Price Crisis Draining Dairy Farms
The Johnstone family faces a grim reality as they struggle to keep their dairy farm afloat amidst a milk price crisis. Adam and Lucy Johnstone, who took over their farm in south-west Scotland two years ago, used to derive a comfortable profit from their herd of 60 cows. Unfortunately, in just three months, the price per litre of milk from dairy giant Arla has plummeted by 25%, dipping below their production costs.
The Dairy Industry’s Pressing Challenges
– The couple is considering alternative routes, like selling milk directly to local customers in nearby Moffat, or possibly exiting farming altogether.
– Industry-wide, dairy farmers in Scotland are grappling with similar challenges. The National Farmers Union for Scotland (NFUS) describes the current price drop as “unprecedented” in both speed and scale.
Financial Struggles of Dairy Farmers
– The Johnstones have calculated that it costs them 38.5p to produce a litre of milk but are only receiving 35.7p from Arla, leading to a £1,000 deficit if they produce 35,000 litres a month.
– Lucy remarked on the unsustainable nature of the financial pressures they face: As an industry, we become accustomed to making a loss, and that’s meant to be okay because other times of the year we make a bit more money. It’s tough to accept that we’re not covering our costs while providing food for the nation.
Exploring New Avenues
The couple’s exploration of direct sales reflects a growing trend among farmers to seek alternative markets. Although they appreciate the community support from local residents and businesses, the persistent financial stress has them contemplating leaving the industry.
– Adam expressed the emotional toll of the situation: “It’s soul-destroying. Farming offers a wonderful way of life, but the unrelenting financial pressures affect us daily. We’ve had numerous conversations about getting out of farming.
Market Dynamics Affecting Prices
For the first time, UK milk production is projected to surpass 13 billion litres this year. Prices for key dairy products like mild cheddar, butter, and skimmed milk powder are nearing five-year lows, according to the NFUS. Major processors such as Arla, Muller, and First Milk have been reducing payments to farmers for several months due to excess supply in global markets and stagnant consumer demand:
– Arla’s Statement: “Global milk production has increased, resulting in more milk available worldwide, which has negatively impacted commodity markets and consequently, prices.”
Call for Transparency and Support
In light of these challenges, the NFUS is advocating for greater transparency and fairness throughout the supply chain. Committee Chairman Bruce Mackie highlighted the need for processors to engage openly with suppliers, especially during such a critical period.
– A recent investment by Arla, including a £144m upgrade to their processing plant in Lockerbie, showcases a long-term commitment, but more immediate support is vital for stabilizing the industry.
The Personal Toll on Farmers
The Johnstones are now in “survival mode.” Adam, a former marine and amputee, confronts pain daily while working on the farm. This financial strain impacts family life as Lucy noted, “It’s not just about keeping a good salary; it’s about survival. It’s not fair on him.”
Conclusion
The milk price crisis is not merely an industry issue; it affects the livelihoods of families and the fabric of rural communities. As the world’s dairy production faces unprecedented changes, the need for cooperative efforts among stakeholders is more critical than ever. The future of dairy farming hinges not just on profitability, but on the collective responsibility of the supply chain to share both the risks and rewards effectively.