Greg Mulholland – 2016 Parliamentary Question to the Department for Environment, Food and Rural Affairs

The below Parliamentary question was asked by Greg Mulholland on 2016-10-07.

To ask the Secretary of State for Environment, Food and Rural Affairs, what recent assessment she has made of the effect of falling milk prices on the UK dairy sector.

George Eustice

Although government cannot control market volatility, our aim is to give farmers improved tools to manage it. We have extended the period over which they can average their tax from two to five years. We are exploring opportunities for a dairy futures market as well as for better branding and labelling in supermarkets in order to improve profitability. We are also exploring opportunities to help farming businesses become more resilient and ready to take advantage of the growing demand for British dairy products both at home and abroad.

According to the latest forecast of Farm Business Incomes for 2015-16, average incomes on dairy farms are expected to fall to £46,500. This reflects the impact of lower milk prices which started to fall in March 2014, and the reduced prices for cull cows and heifers. While the number of dairy farms in England and Wales has also fallen from around 13,500 in 2006 to 9,500 today, the number of dairy cows has remained almost unchanged, which suggests consolidation within the industry.

We have seen an increase in the UK farmgate milk price for the second month in a row to 21.34p per litre in August 2016. The long-term picture for our dairy industry remains positive.