Two loud calls to government to provide financial support to dairy

Today a letter from 13 managing directors/CEOs of 13 GB dairy processors has been sent to David Kennedy, director general for food and farming at DEFRA, which originated from Meadow Foods, CEO Mark Chantler.

The letter references the conference call on Wednesday and refers to DEFRA’s request for accurate and credible supportive data, presumably to back up jaw dropping claims made by the NFU and others (see below).

The letter proposes grants of up to £25,000 or 10ppl be paid to “the most acutely affected farmers” with farmers applying based on their farm income difference in January 2020 compared to the income in April, May and June. Total Maximum cap expected to be £50 million.

Then comes yet another example of poor homework research by the authors with the statement there are approximately 8,500 dairy farmers in the UK. There are 8,454 in England and Wales and circa 12,000 in the UK. This industry needs to do its numbers homework.

The letter claims to represent over 2,000 farmer suppliers and on a quick look down the list of those involved, we assume this number includes Medina, who are not signatories to the letter but presumably part of the Freshways Group. Interestingly, it includes Helers and Long Clawson, both cheese makers alongside milk brokers and middle ground liquid processors, which is a bit of a surprise.

At an industry conference call with DEFRA on Wednesday, it appears DEFRA were unimpressed with the lack of detail provided by the NFU’s and others and they certainly didn’t take too kindly to what were interpreted as veiled threats along the lines if the Treasury don’t come up with a financial package by Friday (today) we will go to the press highlighting the necessity for farmers to cull healthy cows, well DEFRA have not come up with a package yet.

Having seen the letter above, it is perhaps this group of 13 who provided the information to the NFU Dairy Board claiming “2000 dairy farmers are suffering severe financial pressure”.

That number is a big surprise and way too high. It was described as a back of the fag packet calculation from an organisation who should be better qualified. One insider claimed the 2000 number includes Meadow Foods but to date, Meadow have not announced any price cuts connected to COVID19, but its no secret with the added problem of circa an extra 150 million litres of ex Arla milk Meadow have to sell from April 1st, they will be under serious pressure and its farmers will soon be dragged in.

It is a fact that lots of businesses have problems as a result of COVID19 and some will be knocking on the Treasury’s door. When you knock on that door, its essential you go armed with all the relevant facts to win your argument. Note the fishing industry has today been granted a £10m package available to around 1,000 boats for up to 3 months, but they went in armed with a book of accurate up to date data which helped them succeed.

The big question the Treasury will have to address is how any grant or payment to farmers will be used because the danger is that one or more processors might see it as a reason to further cut farmgate milk prices.

Some careful thinking and scrutiny will be needed to avoid any smart jiggery pokery which could mean the main beneficiary of any bail out simply passes to the odd bandit or desperate processor.