Simon Hart – 2016 Parliamentary Question to the Department for Environment, Food and Rural Affairs

The below Parliamentary question was asked by Simon Hart on 2016-04-27.

To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment her Department has made of the effect of the dairy crisis on (a) jobs in the industry, (b) local economies, (c) supply chains and (d) the environment.

George Eustice

The dairy industry in Britain has had a very tough year. A slowdown in global markets, low farm-gate prices, and a strong pound increasing imports, have all contributed to this. The UK average farm gate milk price for March 2016 is 22.38p per litre. This represents a 10.5% decrease on March 2015 and continues the downward trend seen since November 2013.

There were 281 fewer registered dairy producers in England and Wales in April 2016 compared with April 2015 (a 2.8% reduction). This continues the long-term trend which has resulted in dairy producer numbers falling while the average herd size and annual yields per cow have increased. In the year ending February 2016, forecasts suggest that incomes on dairy farms in England fell by 45% to an average of £45,000 per farm. Average incomes on Welsh dairy farms fell by around 40% to £42,000 in the same period. Expert commentators such as Rabobank expect the current cycle of low prices to be maintained through most of 2016.

The Government continues to work closely with the UK farming unions, Dairy UK and Agricultural and Horticultural Development Board (AHDB) to assess the difficult market situation and what we can do to help the industry to recover. For example, we are currently drawing up practical options for creating new derivatives markets, co-operating closely with the AHDB’s volatility forum, farmers, processors and the finance sector.