The union says the cumulative impact of the varied difficulties facing Welsh dairy farming businesses has led to forecasts of a challenging short-term future for many in the sector.
Among the issues putting pressure on the dairy sector are the impacts of a long, dry summer; multiple animal disease threats; the continued financial fears caused by the UK Government’s proposed changes to inheritance tax; the costs and stocking pressures of complying with Welsh Government’s water quality regulations; and the transition beginning on the 1st January from the Basic Payment Scheme (BPS) to the Sustainable Farming Scheme (SFS), all against the backdrop of a volatile market and recent farm gate milk price drops.
Additional costs
Speaking ahead of the Welsh Dairy Show, which is due to be held in Nantyci, Carmarthenshire on Tuesday 28 October, NFU Cymru Dairy Board Chairman Jonathan Wilkinson said: “Rarely have Welsh dairy farmers had to juggle so many varied and competing issues at once. The prolonged hot, dry summer – one of the driest on record – has resulted in very variable forage yields which, in turn, has left many in our industry having to source feed far earlier in the calendar than they may have done in the past. These additional costs are compounded by the spectre of huge potential inheritance tax bills threatening the future of many family farms, fears that coincide with changes in farmgate milk price. These issues alone are enough to have dairy farmers looking at the balance sheet with a large degree of concern.
“We also can’t ignore the threat posed by the multiple animal disease threats we’ve seen over the course of the last year. Dairy farmers have had to contend with the risks posed by Bluetongue virus, although the biggest disease threat continues to come in the familiar form of bovine TB – a disease that routinely wreaks havoc on hundreds of Welsh farming businesses every year.
“The Control of Agricultural Pollution regulations, meanwhile, are leaving many of our members having to do mathematical gymnastics to comply with stocking rates and eye-watering infrastructure costs, too. The stress of inspections should not be underestimated, either.
Volatile market
“All of this is against the backdrop of a volatile market and in recent weeks, some farmers have been notified of a drop in milk price of up to 18%. This creates the first real ‘test’ of the new fair dealings regulations (FDOM) regulations, which were implemented this year following significant NFU Cymru lobbying to improve the transparency and fairness in the dairy supply chain. We will be monitoring how milk buyers are complying with them and raising any concerns with the adjudicator.
“Combined, these sizeable threats and fears – the majority of which are all front-loaded in the short term - are enough to worry even the most positive of dairy farmers. There are a lot of reasons to be optimistic in the medium to long-term, however, in the short-term, Welsh dairy farmers are steeling themselves for a challenging winter. I just hope that these family businesses can weather the immediate storm in order to take advantage of the potential benefits and better times on the horizon.
Actions
“There are a number of actions we believe can be put in place to reduce the uncertainty and bolster confidence in the sector. One of those measures is our ask for a long-term budgetary commitment to the universal layer of the SFS and for the scheme to continue to evolve to ensure it delivers for dairy farmers. We seek a science and evidence-led approach to water quality, recognising a farming by calendar approach does not work. We also look to our governments to increase their levels of public procurement so that we see more Welsh milk, cheese and cream in our schools and hospitals. Another positive step that can be taken is for our governments and levy bodies to capitalise on the opportunities available to export Welsh dairy to consumers further afield.
"Above all else, we hope that consumers continue to support our dairy farmers by buying Welsh dairy produce wherever it’s available.”
