Last month, I attended the #Decisions4Dairy forum, representing the British Cattle Veterinary Association. It was a sobering meeting. This is how I wrote it up for BCVA members:
“Decisions 4 Dairy Forum
BCVA were invited to attend a recent cross-dairy-industry forum to discuss the current dire financial situation and low milk price for many producers. The meeting was hosted by NFU, NFUS and AHDB Dairy. Also in attendance were representatives from the banks, consultancy firms, feed industry, accountants, Dairy UK, Farmers For Action, farmer support groups and the trade media.
Attending with initial scepticism that this could be a pointless talking shop bemoaning the low prices and trying to apportion blame, in fact the sentiment was quite different.
In essence, this meeting was to discuss what support should be offered to dairy farmers to help them make the right decisions for their futures – which for many will be to cease production viagra ou pas. Dairy producers may be segmented into three broad categories: those that will remain and have a plan, those that will exit and have a plan, and those that have no plan. The latter segment are the ones to be most concerned about – and may be the majority.
There was a consensus that many producers need to perform an honest reality check. Banks, accountants and other advisers now express real concern that many dairy farmers are burying their heads in the sand with a blind hope that milk price will improve shortly. According to the most up-to-date industry forecasts, that is not on the cards. Debts with banks and suppliers, particularly feed firms, are mounting up, and many businesses on low milk prices (circa 17 ppl) are haemorrhaging money unsustainably. As an indicator (and this prediction could easily be wrong), the suggested average standard milk price over the next 5 years is likely to be between 23 and 26 ppl (excluding those 15% of producers on retailer aligned contracts). Farmers unable to survive at those prices need an alternative plan.
What can BCVA members do?
As vets, we are often the sounding board/ agony aunt/ trusted confidante for our farm clients when things get tough, whether that be due to TB, FMD or financial stress. Our role in this respect is acknowledged and valued. Inevitably, many of our members are already helping clients through these difficult times by lending a sympathetic ear. This in itself can be difficult for vets and it is important we look out for each other too. As suppliers to the dairy industry, the low milk price affects our own businesses also.
Right now, we are being encouraged to have a dialogue, and explore options with our clients. These, for many, will include ceasing milk production. With that can come a sense of failure, guilt and all kinds of other emotions and regrets. Yet the lottery that is milk contracts means that a poor milk price is probably well out of the control of the individual farmer, and certainly not their fault. Making a decision to quit will always be hard, but easier to carry out if taken early on rather than being forced by creditors.
Considering future changes
Twelve questions, first posed by lawyer William Neville of Savilles, have received media attention recently, and are forming the basis of how dairy farmers might be encouraged to consider their future. They are:
Have you the mind-set to take control of your own destiny? Or do you feel bewildered and a hopeless victim of circumstances?
Is dairy farming right for you and your family? What are your plans for inheritance? Are you doing the right thing for your non-farming family members?
What will you need to invest in your facilities in the next 10 years? How will you fund it and justify it?
Do you REALLY know your cost of production?
What is the realistic future milk price? Are you looking at the evidence or living on hope?
Have you worked out whether you are producing what your milk purchaser really wants? i.e. Are you maximising your return under your milk contract?
What are you really paying yourself per hour? What can you afford to pay yourself and remain competitive? Would you be better off paying someone else and trying to add value to other parts of the business? What are your other skills? How much could you earn off farm part-time or full-time?
Might there be a day when you will find yourself stranded without a milk purchaser at all?
Are you buying all your inputs at best prices, and when did you last check alternatives?
Are you ruthlessly and honestly benchmarking your performance and constantly trying to identify ways to incrementally improve performance?
Have you got your eyes open for niche opportunities even if they start small?
Do you have the right skills for the technologically and market driven global dairy industry of the future?
These are tough questions to answer for anybody. There are some which you, as a vet and adviser, might be able to help with. There are others which you might be able to help with as a friend.
Talk of radical changes are difficult messages to convey, not least because no-one wants to damage the confidence of those committed and able to be part of a future successful dairy industry. Dairy farming is a way of life, and can offer fantastic and rewarding experiences along with the challenges. That is still likely to be true for many. The #Decisions4Dairy initiative is in its infancy, but it is there to help support individuals and families make the best decisions through the present period of change and financial pressure. As cattle vets, we can be part of that process and there are things we may be able to do to help.”
What are your thoughts? Write a comment…