Dairy Farmers Are Paying the True Price for the UK's Cheap Milk

British shoppers are happy to pick up a pint of milk for just half a pound, but out in The Yorkshire Dales, nearly half of dairy farmers have left the industry in the past ten years.

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Feb 25 2015, 3:50pm

My grandmother was crowned Dairy Queen of Cockshutt in 1938. My mother grew up under the udders of her neighbour's dairy farm. My father used to drink a cold pint of milk every Friday night with his dinner. In short, the way my family feels about dairy is the way the yakuza feel about tattoos and sake, or the mafia feels about garlic and respect.

So it was inevitable, while running over the hills and along the rivers of the Yorkshire Dales this week, that my thoughts would turn to dairy. More specifically, to our danger of losing it.

According to the Harrogate Advertiser, 48 percent of dairy farmers in North Yorkshire have left the industry completely over the course of the last ten years. The combination of ferocious price cuts, fluctuating commodity prices, a Russian import ban, the drop in demand from China, payment delays (up to four weeks in the case of First Milk) and some less-than-brilliant British weather means that many dairy farms are running at a loss, unable to pay back the money they've borrowed from the bank.

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And all the while, Tescos and Morrisons are selling a pint of milk for just 49 pence, ASDA for just 45 pence. As the NFU dairy board chairman Rob Harrison said in an interview earlier this year, "Being a dairy farmer at the moment is like being a boxer—on the ropes and taking body blow after body blow—there's only so much you can take before throwing in the towel."

The problem, arguably, stems from competition; competition from supermarkets to produce milk ever cheaper, and competition to sell your own product, directly, since the dissolution of the Milk Marketing Board in 2002. "When the subsidy system collapsed in 2003, what the farming community failed to realise was that everything they produced had gone on to the world market," rural commentator Mike Keeble tells me from his home in Wensleydale.

If your idea of a dairy industry is a busy, rosy-cheeked army of farmers in tweed jackets, tickling the ears of their small herds before selling their milk on to the local shop, think again. The modern dairy farmer is as tied in to the fortunes of Russia and China as they are to the village down the road. "The poorer Chinese who want a Western diet, and the huge need for infant milk powder, is the engine driver of the world dairying," says Dairy Industry commentator Ian Potter.

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The second problem, of course, is planning. Or the inability to do so. Farming has always been as unpredictable as the wind, but now—vulnerable to the swings of global economics—farmers seem even less able, or perhaps willing, to build up contingency.

As Matthew Bell—a dairy farmer in the valley of Raydale whose grandfather came to the farm in 1937—puts it, "The prices for milk now seem to be linked to the world price, which is very cyclical and fluctuates widely. It causes farmers to be profitable at times and then struggling to make ends meet at others. It makes it very difficult to plan ahead." A neighbour of Bell's, at Lowthorpe Farm, tells me that, "If you make an error on your margins at the moment, they'll take you down. Anybody that's expanded over the last few years, put improvements for the cattle or machinery, who borrowed from the bank against the price of milk 18 months ago, is now getting nowhere near that price."

However, Mike Keeble is a little less sympathetic; "People were increasing their herds without any business planning, just to compete with their neighbours," he tells me. "But in dairy, as in any other business, you have to budget for the fluctuation in prices. A close friend of mine, in Lancashire, has budgeted to lose £1,000 a week for 18 months. Because he's very confident that the price will jump up again in 2016."

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Eighteen months of failure may sound like a terribly sharp burden to bear just to keep the nation in the white stuff. But perhaps the dairy farmers of Wensleydale have hit upon something of a solution: to go small. "Our milk goes to Wensleydale Creamery at Hawes five miles away, to be made into cheese," says Bell, who is also the Chairman of the Wensleydale Producers Committee. The Creamery, which is a tourist-destination cheese factory replete with heaving gift shop, pays a premium for the milk from its 44 suppliers, who are all found in and around Wensleydale.

I stop in there to boost my own personal fat content after my morning run and am dazzled by the choice of more than 12 different cheeses, including smoked Wensleydale, Garsdale with garlic and chives, smoked cheese, and even a salted caramel Wensleydale. "The Wensleydale Creamery has been a phenomenal success," says Ian Potter. "It's extremely popular with visitors and they've got a very strong brand."

After all, Wensleydale has been producing milk and cheese since the Cistercian monks came to the area with the recipe back in the 14th century. "But, even with all its provenance and story, they are still selling into a fiercely competitive market," says Potter.

The fear, of course, is that the pressure will prove too high. We can't all rely on a history of Cistercian cheesemaking, Wallace and Gromit cartoons and a steady turnover of souvenir tea towels to keep our dairies going. "Smaller farms will inevitably go out unless they have niche markets," says Mike Keeble. "Weardale has virtually no dairy units now, Teesdale has almost none, Swaledale definitely has no dairy units at all, and in Wensleydale there are very few dairy farms west of Leyburn."

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The solution, according to Keeble, is to swallow our reservations about intensive farming; if you can't go small, perhaps you'll have to go big. "At the bottom of the dale we've got six or seven units, all in excess of 300 cows, some of them up to 1,000. It is intensive farming, but many vets will argue that the welfare and health of the larger herds is superior to the smaller ones. And they're all getting their way through the present economic disaster." While that may be true, I can't help but rear up at the idea of huge herds, raised in sand, indoors all year-round, never tasting the Yorkshire dew or feeling that wild Wensleydale wind.

There is, of course, another solution; we simply start paying more for our milk. According to Ian Potter, the market may already have bottomed out and the next few months will, hopefully, see prices increase as quickly as they fell. Indeed, Potter argues that even the phrase 'milk crisis' may be misleading because it's not a case of how low milk prices go, but how long they stay low; only if the dip lasts 7-9 months will we be entering crisis territory.

"I think the majority of [small Wensleydale farms] will weather the storm," Potter tells me. "They might wake up one day and think, "Hell, why am I doing this? Why am I getting up every morning and every night to milk a few cows?" but if they can get through May and the market continues to improve, it'll be a different ballgame."

Let's hope. Because, as Potter says, there's nothing like seeing cows turned out, kicking their heels and eating grass.

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Romantic bullshit aside, The Dales without livestock is almost unimaginable. Allow the dairy industry to collapse, and we could be left with what Keeble describes as a 'desert' of white grass and bracken on high hills trodden not by Friesians, Holsteins or Swaledale sheep, but by the running shoes of people like me: out-of-town visitors looking for nothing more than a break from city life on bleak and wind-swept moors. Tractors will give way to Range Rovers, tourists whizzing around roads tarted up for last year's Tour de France. Stables will be converted into B&Bs, and the next generation of farming families will be forced to move to Manchester, Sheffield or Leeds to making a living.

And, all the while, harried city shoppers browsing the supermarket shelves in towns miles away continue to pay less than 50 pence for a pint of milk, unaware and unconcerned that one of our oldest industries is pouring away through their fingers.

There's no use crying over spilled milk. But it might be time we started paying more for the stuff.