Farm Diary November 19 2008

I watched them unload the crane which was self erecting, and then securing it to the concrete slab, loading the counter weights, and then set the 'overload' system. This was done by picking up a tonne bag of sand just above the ground, at full extension, whilst four burly men sat on it!

The electronic sensors were set, and when the men jumped off, the bag jumped up about two feet, such was the spring in the jib. Given the time of year and the type of ground we are on, a crane is so much better than wheeled vehicles, and loaders.

The time table has slipped another week due to the late arrival of all the steel re-enforcing mesh (which is specially made). This has made co-ordination over Christmas difficult, as they need to break for Christmas holidays at a certain stage of the build. I did offer that they would be welcome to work and catch up a little; we would not mind the noise.

The cows are now learning German! Having mastered Welsh and Russian, Bulgarian, Philipino, Latvian, Estonian and South African, they are picking German up very fast, as the technicians working on the Bio-digester plant are from Germany. An unwelcome visit from the Health and Safety Executive calmed us down a bit last week. There was nothing wrong on the site, but one lorry was caught reversing without one of those irritating bleepers, and told to get it fixed. We can look forward to more visits in the next few months I expect.

What a mad world we live in. I hope that with the present 'difficulties', we take stock, and re-assess some of our values and priorities. Robert Wiseman and Dairy Crest, both milk processors, have warned that their next year's financial results are going to be hit by the weakening global market for dairy. As they are both British companies, operating in this country; why does the global market for dairy affect them?

The answer is bulk cream prices. When skimmed, semi-skimmed and now 1per cent milks are processed, there is surplus cream. Given that selling it as an unwanted commodity is the easiest way of disposal, that is what they do. No innovation, no added value; indeed quite a lot of our cream has been exported to Belgium over the years, and imported as luxury chocolate, multiplying its worth many times.

The next question is. Why does the dispersal of a by-product have such a dramatic effect on their profitability? Here is an interesting point. The ruthless trading practices over the past ten years or so, has seen all the margin in the liquid milk sector delivered to the large retailers.

Not only have the likes of Wiseman watched semi skimmed milk being sold at the same price as full fat milk on retailers shelves, but they have also shared the income from surplus cream sales. Whilst they could protect their margins by only passing back to the farmer what is left (and they have done this for years), it was all fine and good, as the next factory was built, and more price slashing in order to push up sales.

After many years of systematic abuse, dairy farmers have been leaving the industry in their thousands, and those of us still around are not planning to invest as our confidence is shaky (to say the least). With an unprecedented shortage of milk, prices are still rising, and now the processors are in real trouble. If they cut the farm gate price, they will trigger a massive exodus; and yet, after years of giving it away, I'm not sure they know how to sell for more money!

I was asked by the Food Standards Agency a few weeks ago, why we produce all this fat on farm, as it's in surplus both here and in Europe, and government want to tackle obesity. I explained that we are encourage through our milk contracts to produce fat, as the money generated from the sales of excess fat is used to subsidise low fat milk in the shops. The lady thought this was madness, but it is what happens when price becomes everything.

If I may quote a young Nuffield Scholar from Ireland; Kevin Twomey 'The world can now see that a leading dairy country with the best domestic market will decline due to ruthless trading by processors, and the strangling power of supermarket chains, supported by a government that has forgotten the most important fundamental is being as self sufficient as possible in food production'.

There is another element that is equally damaging to dairy farming, and that is the inability of farmers to work together. As the window of opportunity for changing our trading contracts with processors diminishes, there is still insufficient interest to accomplish as much as we could.

Quite a lot of improvements have been made with the smaller groups, and smaller companies, but the large selling groups and the Co-op's have done little. My message about contracts has fallen on deaf ears to some extent, just as my message on the need for independent evaluation of Farmer owned Co-op's did.

Now we have rumours that all is not well at Dairy Farmers of Britain, and whilst I would not get involved in 'wildly inaccurate and potentially damaging speculation', to quote CEO Andrew Cooksey; had an independent evaluation been carried out annually, worried farmers with tens of thousands of pounds invested and more in potential liabilities should anything go wrong, would have been better placed to know the true performance and position of their business.

The reaction from farmer directors at the time, was that I was anti-co-op; nothing could be further from the truth, but I want to see transparency, and I want to see them exposed to the same scrutiny as Plc's, for their own and their owner's sake.