In the spotlight: Disease and regulations in UK’s dairy sector

Despite the headwinds facing UK’s dairy industry, the sector has enormous potential to thrive. Photo: Koos Groeneveld

Disease management, regulation, compliance and investment, supply chain engagement and political interventions pose challenges and opportunities for the UK dairy sector.

But despite the headwinds facing the industry, the sector has enormous potential to thrive, according to panellists speaking at the NFU conference fringe.

The panel of NFU Dairy Board chair Paul Tompkins; Dairy Board appointee and fifth generation dairy farmer Amy Hayes and National Dairy Board vice-chair Ian Harvey, offered a wide-ranging examination of the industry, but felt that the ‘elephant in the room’ was the government’s Inheritance Tax proposals.

Inheritance Tax’s impact on farmers

The proposals, which has led to 3 sets of tractor protests in London in recent months, will, said Hayes, have a huge effect on the future of traditional family farms, while Harvey added that larger landowners could be forced to sell off tenanted farms to meet their obligations, which could result in multi-generational livelihoods being lost.

He added that farmers trying to save their farms could decide that cows were the easiest asset to sell, forcing some to leave the sector for good: “The knock-on effect has been grossly underestimated,” said Hayes.

Tompkins said campaigning on the issue would continue but there are other key priorities: “While inheritance tax is taking up a lot of our emotional capabilities at the moment, from a Defra perspective, it’s taking up a very small amount of their bandwidth and I need to be equally focussed on all the other things they are touching on.”

Dairy has made great strides in improving its carbon footprint through productivity gains, he added, but tight margins meant that farmers could not shoulder the burden of future investment on their own.

Supply chain engagement

Processor acquisitions, such as the purchase of Yew Tree Dairy by Muller UK, has seen significant investment into the industry, but the panel said that while the money increased the processing capacity, the milk pool was often still an afterthought, which caused friction.

Tompkins said that consolidation and investment could be seen as a good thing, but the lack of competition for milk was bad for producers. Harvey added: “In the longer term, we want more processing capacity. We want our processors to add value effectively, cheaply and with innovation.”

The government is hoping changes proposed through the Fair Dealings Obligations (Milk) Regulations will improve relationships between farmers and processors across the supply chain.

Tompkins flagged the ability to negotiate on pricing and changing contracts: “Too often, regulations are seen as a silver bullet, but this is a significant step in the right direction. Farmers will be in a much better place to negotiate.”

Regulation, compliance and investment

Water quality is expected to remain an important issue, with many of the recent intake of MPs elected on a specific mandate to make improvements. Action, the panel felt, needed to be taken at a catchment level rather than being mandated nationally, due to differing local issues.

Tompkins added that infrastructure for storing nutrients was costly and Hayes highlighted the decision to put the infrastructure grant on hold: “The shame is that a lot of people do want to do something and make a change, but the support is not there. The cost of this to business is massive but schemes were hard to access and that brings frustrations of their own. It’s not that people don’t want to be compliant – the intention is there,” she claimed.

Harvey said tenant farmers in particular found financing slurry management a struggle due to the huge financial commitment and uncertainty of the business.

Disease management

The NFU is taking a more proactive approach to disease control, said Tompkins, highlighting that swiftly raising the alarm and encouraging industrywide responses to the threat of bluetongue and the recent foot and mouth disease outbreak in Germany had been effective.

However, the illegal transportation of meat across borders, highlighted most recently in the FMD outbreak in Germany, was a major threat and had to be met with a serious response to act as a deterrent.