Organic Farming Takes a Knock

FOR TWO DECADES and more farmers have been told that doing it organically is the only 'sustainable' way to farm. In the past few weeks I have read two reports which question the benefits of organic farming.  These are two high profile studies come from the most prestigious sources - the universities of Oxford in the UK and Stanford in the USA. Both have gained considerable media exposure, and they conclude that conventional farming isn't as bad as we've been told.

I conclude that organic farming is beneficial to all farmers, as it provides a premium market for all types of food that has the effect of providing an uplift for the food market as a whole.

Quad bike gets electronic locking

The New Issue of Practical Farm Ideas, Vol 21, issue 2, has been printed, mailed to subscribers and will be in selected rural stores from Thursday Aug 9. Click through here for details and to order 

Our cover story in this new issue helps farmers keep their quad bikes - and other machinery - on the farm and not part of an insurance claim for theft.

Quad bikes are so often left with their keys in the ignition. It means that Fred can use it and leave the bike for Jim. That the keys won't fall out of the pocket when chasing sheep. Or, if the bike is parked close to where you're working, there's no chance it will be nicked in broad daylight.

Scallies will cruise by and check to see if the keys are there,

Spotlight on The Dairy Crisis

The role of each party involved and why the minister might be deaf. 

A neighbouring dairy farmer dropped in yesterday...  "what can be done to get us out of this mess?" he asks. He's an efficient farmer, runs a herd of 140 cows with his son, and is very concerned about the milk price reductions due in August. 

I suggested farmers need to look at the components of the problem. What is the role of government? Of the farming unions as representatives of producers? Of milk buyers and, last but not least, the farmers themselves? Can farmers really expect Minister Jim Paice to order an increase in the milk price?

Practical Farm Ideas magazine helps farmers find new methods that improve efficiency. This blog shows how one farmer has gained real control over mastitis in his herd - with zero cases in 130 cows the year we visited him.

Home built back-flushing 

Let's get the London Milk March right!

Milk:  the on-going farming crisis

The presentation of the current dairying crisis needs planning and presentation. This article outlines what needs to be done by farming leaders, and the marchers in London. Dairy farmers need a better deal. But to get it they will need convincing arguments, a compelling presentation of the facts, and friends in high places. 

The hope is that the march will include these, as well as the passion and noise. 

The performance of farming leaders on Radio 4's 'Today' last week was seriously unconvincing

The Today Programme presenter John Humphrys is sympathetic to the dairy farmer's cause. For some years he had a dairy farm himself in Carmarthenshire,

Wiseman milk price forecast correct

When on January 16, 2012  Müller Dairies bought Wiseman for £279.2m, the deal was said by Robert Wiseman to make strong strategic sense, to have synergy and the maximise the 'complementary positions' of the two companies.

The 360p/share deal looked good for Wiseman shareholders, who had been trading the stock at 250p. I discovered that a large proportion of the purchase was from a Deutsche Bank letter of credit for €250m, at a rate greater than 5%.

At the time we concluded that Müller would be wanting it's Wiseman dairy farmer suppliers to contribute to the cost, as the opportunities for an uplift in prices, despite the operating synergies, seemed limited.

So it is no surprise to hear that on April 30th Wiseman announced at they would be cutting farm gate prices by 2p (6.6%) to 26.42 p/standard litre.

Water harvesting saves farmer money

Practical Farm Ideas arable contributor Mark Pettit who farms 600ha of all combinable crops near Gainsborough

The diesel question - future price trends, and cutting costs

As the price of oil rises the pain for buyers increases. Farmers are price takers and not price setters, so they have no possibility to raise their selling price of corn, meat or milk to take account of the rise in diesel. 

                                                www.farmideas.co.uk

Securing supplies of diesel is a major concern for farmers today. Now is not the time for supplies to be interrupted. Each farmer has to make his own buying decision, and the relevant information he has to do this is scarce, even though commodity markets are in information overload, with facts mixed up with fiction, 

March 23

A less than neutral budget

Farming didn't get a mention in the Budget speech, but that doesn't mean it will have no effect on farming. In fact, the long term consequences could be quite considerable.

ON FUEL, the Chancellor is criticised for not giving an inch on the rising cost of fuel prices, and the confirmation of the increase in fuel duty this summer will surely make things harder for people in the country.

The answer is going to be greater economies on the farm. Fuel consumption is going to be of greater consideration when choosing tractors and machinery, and when deciding how to do farming operations. Will farmers continue to have a fuel arrangement with their contractor which

farmersforum.ie

farmersforum.ie

BBC Countryfile moves further away from farming

The Magazine  -  Contact  -  On-Line Info

BBC Countryfile moves further away from farming

Many farmers are complaining that 'their' TV slot is being hi-jacked by people they describe as 'the sandal brigade', 'foodies and fadies'  and 'rural tourism' and so on. It's hard to deny it. 
But, as Andrew Thorman explained to a group of farming journalists from the GAJ, the audiences for all the farming programmes, including the early morning Farming Today, have increased

How productive is it to roll grassland?

The cost of diesel and time makes it important for each tractor job to have a positive financial outcome. This blog asks about the benefits of rolling grass in the spring, and suggests the outcome may actually be negative. 

Farmers have a major role in drought and flood issues

Todays DEFRA conference should be looking at soil management

The up-coming drought in the S-E of England is worrying farmers, who are demanding concessions to any drought orders in order to protect their crops and livelihoods. Yet it is on their land that the rain mainly falls. Is modern land management, that is, the way farmers work the land, in any way responsible for the problems of drought and flood?  And if so, is there anything which can be done to help solve the problem? 

Practical Farm Ideas thinks there is.  For years

EU funding: less for farming, more for science

Farm leaders need to focus on agri research funding as well as defending farmers' CAP entitlements

'Cut spending on agricultural support through Single Farm Payment and use the money on increased research' is not simply a call from UK universities wanting to protect their budgets, but is one which looks like getting the backing of Business Secretary Vince Cable. 

In a recent interview to the magazine Science|Business Vince Cable said "Overall UK government policy is to restrict the EU budget, but within that overall budget we would like to spend more on innovation" and he went on to say that money should be spent on science rather than agriculture. 

With the Science minister David Willetts right behind him, and PM David Cameron personally launching an overall UK Innovation Strategy, there's a good deal of support in Cabinet, and Caroline Spelman from Defra looks likely to be out-gunned. 

While the focus of innovation is on science outside agriculture, the hope is there will be opportunities for innovative ideas and developments in agriculture to be rewarded and financially encouraged, and this could and should include farmers. 

Will the farmer's greatest lobbying body, the NFU, catch the direction the wind is blowing and ease the way for a leg-up for ingenious farmers who have ideas which can make a difference throughout the world of agriculture? Plus making sure that agri science and technology is up there with other life sciences, engineering and other research areas. Or will the NFU stick to its guns and continue to focus on payments based on area and past entitlements?

Agri research has been under pressure for the past decade, and many valuable and well established centres either closed or minimised. A review of the present work, in both agri science and agri technology would be a useful starting point for the whole industry, farmers included. At present it always appears that there is significant duplication in some areas, while others are left unattended. 

http://www.sciencebusiness.net/news/75582/Cut-agriculture-for-the-sake-of-science

Look through the FarmIdeas website and download the Complete Index from this page: http://www.farmideas.co.uk/articles.php

Some 'modern' farmers are slow to change

Some 'modern' farmers are slow to change

For them, the risks of change are greater than the security of doing things the way they have been done for the past few decades.

Is there any other trade or business so resistant to change and technical development as farming? Air transport took a about a decade to make the huge change from propellers to jet engines. Medicine takes on new drugs and techniques as fast as they are approved. The print industry, in spite of huge union resistance, took up computers long before they became a part of household life. Retailing has gone on-line, phones gone mobile, cars diesel, broadcasting digital, and those in any of these industries who have taken the view that change can only make things worse have been truly left behind, sometimes finished.

Here are two recent experiences which tell me that farming is different. Take the case of the dairy farmer who has been shooting his 'surplus' bull calves for the past decade or so. When an alternative is suggested, an alternative that might be slightly more productive, which might use this by-product of milk production as a human food source rather than an expendible waste product, which maybe a more ethical option to shooting them for disposal, he hums and haws, looking for good reasons why his calf policy is still right economically, and therefore, as a business-like farmer, ethically okay as well. The other farming head-in-the-sand is a 1000 acre cereal grower who totally resists the idea of replacing his plough and power harrow policy, justifying his rejection of min-till and other techniques by saying that he's "a traditional farmer, in an locality that is made up of traditional farmers - we plough and have always ploughed", someone who considers his cultivation methods makes him a pillar of society and sobriety, giving him the highest agricultural standards, even though the comparative costs, both in terms of carbon footprint and ££s, are considerably higher.

The case of the calf shooting farmer came on the BBC Countryfile programme of Jan 22 2012. Presenter John Craven looked at humane 'rose' veal, and how it might provide a market for the surplus bull calves from dairy herds.  Going into the street with some ready-to-eat cooked samples to test consumer reaction, and getting approval; talking to the meat trade and recording positive comments, he then gets his boots on a talks to our commercial dairy farmer.

The interesting part of the interview was the farmers response to John Craven's asking what was stopping him rear the calves rather than shoot them at birth.

"It's not so simple," the farmer explained. "I don't know if I have the skills to rear these calves as veal. I'd need to find out the techniques, the costs and find markets for the finished rose veal calves." It sounded as if he was saying "I don't want to be bothered, my business is alright as it is." even when faced with the evidence that there might well be a better solution to his calf problem.

Which takes me back to the original question - is farming the trade that's most resistant to change? In what respect is farming different to other industries? The answer must be that some modern day farmers are very wary of new methods, and find they can afford to be so. For them, the risks of change are greater than the security of doing things the way they have been done for the past few decades. In a business which has such significant tax payer support - amounting to nearly half the Total Income From Farming, they have a financial buffer which other businesses don't enjoy, and one which allows older methods to remain financially feasible.

How good it would be to hear the dairy farmer tell John Craven - 'it sounds an interesting idea, I'm going to try rearing a few of these calves for veal and get in touch with people who can market them'; and from the arable man 'it would be worth while experimenting min-till on a field next autumn, even with some adapted machinery - I would like to find out more'.

"If you want to become richer than a banker, become a farmer" says top US investor

The message that the world of global food surpluses is coming to an end is now well understood. The news headlines might have recently been dominated by riots, the Arab Spring, phone hacking and Amy Winehouse, but food and energy supplies are an issue which be with for for many decades. 

Farmers are the people who know how to grow and harvest food, and, if we're all going to be eating in 20 years time, they will need to get even better at it than they are today.

From being a menial, low paid, dirty job with a bit of shooting or ferretting being the only perk, the business of growing crops and looking after livestock suddenly looks very different. 

Time magazine reports the legendary investor Jim Rogers as saying "if you want to become richer than a banker, become a farmer." They concluded that although being a farmer wasn't too sexy it will certainly make you rich.

It's starting to happen. While real estate prices in the USA are falling, the value of the average farm has doubled in the past six years. When you travel to farming country you don't see poverty, but prosperity. "The local banks in Grand Island, Nebraska, are sitting on a lot of cash, the Case combine harvester factory has a full order book, and the local GM car dealership says this is the best year ever, with customers who normally buy a Chevy Suburban trading up to a Cadillac Escalade. Prosperity is reflected in house prices as well, construction is good and Nebraska's unemployment is just 4.1%, a different league to the 11.7% in California. 

The same is happening in the UK, but perhaps with less publicity. Last year farm land prices in the UK rose 6% and have multipled by three since 2001. Land is attracting buying interest from farmers and investors, better grain and farm commodity prices are rising prosperity in farming areas, something which has not been seen for decades.

This bullish activity means there's value in knowing how to do farm successfully. The new issue of Practical Farm Ideas reveals a few secrets of the business, which when coupled with the other issues published each quarter since 1992 creates a total course in practical farming. 

Practical Farm Ideas in this issue shows farmers how they can reduce the time taken filling seed drills, fertiliser spreaders, and potato planters. It features plastic see-through tractor window guards which stops stones and debris breaking them; shows them how to make an extension for their pick-up bed so they can carry more stuff in the back; and how to make a lever handle for an electric drill which makes drilling awkwardly placed holes in building uprights easy to do. Altogether there are 45 workshop ideas which will help farmers do jobs easier, cheaper and better - ideas that are particularly useful now that we really do need the food they produce. 

Dairy farmers face tough winter

Numbers of farmers in the dairy sector face a tough winter, and the shortage of fodder and bedding for their stock will only add to their troubles. The article suggests that the situation could be helped if those farmers growing crops would bale more of their straw, and even bale straw from oil seed rape. In this way farmers can be seen to be working together. 

To the arable farmer the straw from his crops of wheat, barley and rape is often a minor headache. He wants the field cleared to get in with the cultivator. Chopping and spreading adds some nutrient and saves some fertiliser, and means the next task can be done directly. Baling straw spells delay, albeit  some extra income. The bigger the corn acreage the greater the headache created by straw. 

To the livestock man, straw adds fibre to the diet, and makes the silage go further. It keeps livestock clean, helps reduce disease, is 'inspector friendly'. Buying, and paying for it is also a headache, particularly in years like this when supplies are tight and prices sky high. 

Farming unions and other groups should be able to help pull the two sides together, though ultimately the decider is, of course, the costs and returns. It's not just a job for the farming unions, there are machinery rings and agricultural societies which can do their bit as well, and magazines and the media can play their part too. 

Baling rape straw is not as daft as it sounds

Promoting the use of alternatives to wheat and barley straw is another useful activity. Oil seed rape straw is routinely chopped and incorporated, but some farmers have experimented with using it for bedding with considerable success. OSR straw has its problems: it can be too green and sappy for baling and so many agress it is best got rid of by chopping and spreading on the field; unlike barley straw it has no feed value so not worth the bother; as a bedding material it remains an unknown quantity for many farmers. 

Yet some livestock farmers have found it a good substitute, and some mixed farms manage the job of baling so it is usable in the winter as bedding. Rape straw can also be used in cattle rations made in a mixer wagon, and Jennifer Picken, ruminant nutritionist at Keenan systems, says it helps maximise the feeding value of silage - something which is all important for dairy farmers this year.  Don't use too much and mix it well, is the advice. Rape straw is best as feed when not too stemmy and baled dry. These qualities are less important when the straw is  used as bedding. 

Baled rape straw can also be useful as fuel in a big bale incinerator. 

Another alternative are rushes. One Practical Farm Ideas contributor cuts and bales the rushes on his low lying wet land and saves £60 on the cost of wintering each bullock. Instead of using the topper he mows, turns if necessary, and then round bales the 'crop', which provides the cattle with good aftermath grazing - all the better for having the trash removed. 

These are positive practical ideas which can be implemented by the farming community.

With the rising price, and shortage of inputs, NFU Cwmru calls for a 26% rise in the price of milk, from the present 26p average to 33p a litre. David James who chairs the Pembrokeshire NFU says feed prices have risen sharply, with compound feed some 30% over last year, ammonium nitrate up 50 % and fuel 25%, while the price of milk at the farm gate has lifted just 11%.  A number of farmers are going to find forage supplies tight this year, though not all is grim news as silage quality is good. 

Hoping for a price increase is no way to plan the future of the business. In love, war, and farming, there's always the need for action as well as hope. When unions join together to promote action which results in one farmer helping another - even if there's no profit in it - there's evidence that all are trying to resolve a problem. This is surely feasible when it comes to straw. For while arable farmers keep the straw choppers going, livestock men are wondering where on earth they are going to get supplies. 

Providing practical help for the sector under pressure underlines the urgent need for economic action, and shows that the farming industry as a whole is ' doing all we can to help'. 

The future of the small family farm

The future of the small family farm

Defra's interest in exploring how agricultural tenancies can be made more competitive and supportive of people entering farming might be seen as more political than practical. A reduction in the number of farming holdings has significant benefits for government. Small farms make up a significant and deserving section of the rural poor, they use technology and methods which are out-dated and thus often less environmentally friendly, they have poor records and management systems. They are often involved in the supply of goods, such as eggs and vegetables, direct to the consumer, which requires difficult and expensive regulation. 

Incomes of large farms are generally satisfactory and have fewer social issues. Large farms are easier to administer, and, being mainly concerned with the supply of commodities to the processing and supply trade, have appropriate inspections and regulation. Large farms have recording systems and are fully conversant with the various departments. 

The disadvantage or risk of an industry made up of large farms is less obvious. However, they are less likely to pass on husbandry skills, as they increasingly rely on a workforce from outside the UK. They are more concerned with mono-culture and are less diversified in terms of enterprise and genetics. Large farms suit the supply of large retailers, but have difficulty in developing niche and high value products. Large farms are inflexible in operation, as investment and skills are contained in a limited and specialised area of farming. 

Yet the evidence suggests that soil - the basis of all agriculture - is improved by mixed farming operations and is damaged by mono-culture. 

Small farms have a long and healthy future in Britain. Their problems arise when they are managed as if they were large units - ie supplying commodities to processors like their larger counterparts, but in smaller quantities. 

Excerpted from 'The Future for Small Family Farms' :  a talk by Mike Donovan, editor, Practical Farm Ideas.

Farmers cannot prosper without new ideas

Protecting tractor glass from breaking

Have you noticed how big tractor cab windows have become? Not only are they an easy target for the wayward stone thrown up by the hedge trimmer, mower, tedder and other implements, they are expensive to repair. And when they shatter, the bang is quite frightening. 

The new issue of Practical Farm Ideas shows how an inventive farmer has made clear plastic protectors - you can see through them but stones bounce off. They work so well he's making them for other farmers. 

Cultivator modification has "transformed" the way it works

Arable farmers with the popular Kverneland CLC heavy cultivator or similar will be interested to see the benefits of replacing the depth wheels with a Simba type rear packer roller. The cultivator depth is better controlled, and the ground is compressed, holding in moisture.

Farm tax planning tips can save £thousands

Farming has returned to profit in some sections, yet many businesses do little if any tax planning. The Financial focus provides plenty to discuss with your accountant. Should the farm business be a Ltd? Should a new vehicle be bought by the company? Should my 25 y-old son be made a partner? 

Sealed bearing 

When a sealed bearing starts to grumble, there are many who think about puncturing the rubber seal and squirting in some grease. Here's a guy who has been doing this on his MF 520 disc harrow for years, and a twice a year greasing keeps them running silently.

Quick turn-around for seed drill

Filling the seed drill or ferti spreader in the field needs a loader or telehandler, plus the tractor and a trailer to carry the bags. That's a lot of machinery, some which might be used for other jobs. For the last 20 years our contributor tows a trailer with the seed or fertiliser tipped in loose and an auger driven from the tractor hydraulics, and fills the drill in minutes, with the amount he needs for the job. 

'Helping farmers cut costs' has been the long term slogan for Practical Farm Ideas, and the new issue shows some 50 ways this can be achieved. The quarterly magazine has an annual subscription of £15.40 from www.farmideas.co.uk 

Further information from Mike Donovan, editor  editor@farmideas.co.uk    T: 01994 240978   

Subscribers' Newsletter July 2011

May: ISSUE 20-1, published May 8. Changes to the magazine cover have gone down well with farmers and other magazine designers - some even emailed us with their approval!

May: GRASS & MUCK, Stoneleigh  May 18

With minimal crops it was difficult to assess forager and mower performance. I was looking for, and found, some machinery that would do the job cheaper, but most companies were parading ever larger more expensive, high capacity machines. The economics of running these monsters is hard to grasp, and I am still not certain about the effectiveness of clamping when loads are coming in so quickly. I bumped into Hugh Turley from N Ireland, a reader who has sent brilliant forager ideas for  previous issues, and we both looked at the unacceptable level of waste left by the rakes - in some swaths it must have been at least 5%, a lot to leave behind.

The new Farm Safety Charter was launched at Grass & Muck by all the major farming organisations, including CLA. I contacted their Welsh President, William Worsley, who "pledged to improve the safety record of people working in agriculture.. (press release dated Wed 18 May). Having had a practical interest in the subject for many years, and creating a Child Safety on the Farm leaflet, I suggested they promote some practical ideas, such as fixing beacon masts to road going ATVs, using home made spike guards and many other ideas we have published in past issues. Should I be surprised at getting no response? So much for 'pledges'. I’ll need to try harder to interest them in promoting these ideas.

June: CEREALS

Again, the demo part was hardly taxing or, in many ways, very informative, though it's always good to see kit in action. The PFI Arable Expert, who grows cereals on the Lincolnshire fens, decided to replace his Bateman drill with a modern multi-stage tine machine, and we went through his research and decision processes, which are revealed in full in the forthcoming issue. Choosing the right machine involves a number of issues which, as all machinery buyers know, are often in conflict (I want a bigger machine, but I need it to be less heavy... I want something more complex, but want to pay less money). The drill he bought will be delivered in January next year, in good time to get inside the new Capital Allowance limits which will have a considerable effect on the cost of new machinery - see below.

I had a good meeting with a LloydsTSB agricultural advisor and was surprised to learn the size of their farming department, centred in Bristol. She had never seen our magazine, and thought it would be useful for the staff, who spend much of their time visiting farms and assessing the viability of projects.
I met with Gary Markham, the partner in Grant Thornton Accountants who heads their agricultural team, and we talked about the effects of high cereal prices. Tax Planning, he said, was a necessity for cereal growers, and it was alarming how few have taken an interest in the subject. This was particularly interesting to me, as I was invited to the Chartered Accountants Farming and Rural Business Group annual conference in July. (see below)

June: WWW.FARMIDEAS.CO.UK

Since the start of the year I have had Ben Wheeler of Beach Software in Swansea rebuilding the magazine website, and at the end of the month the work, though not complete, was deemed ready to go live. The new site offers an extra dimension, in as much as individual articles from back issues can be instantly downloaded. At present, the number is a paltry few dozen, but when time permits more will be uploaded. The downloads are 99p, and there's a new free one every month. The internet can become too great a focus and I am constantly having to remind myself that not all farmers are stuck in front of their computers all day, but are doing other far more useful and important jobs, like dagging sheep, baling straw, milking cows and drying grain. For many, the post and paper PFI is the way they like it.

Farm Visits: HEREFORD While I occasionally meet farmers whose business progresses on an even path, many, indeed most, have to make U turns and changes in direction over the years. We visit a farmer whose potato enterprise has been considerably reduced, and whose main work is now contracting, both with his potato equipment and other kit. A qualified ag engineer, he's built some very interesting machinery. Converting artic step trailers for ag use has involved fitting sprung drawbars, and he has done some to his own design, which he drew up having experienced the deficiencies of some manufactured ones. Novel machines include a potato weeder for organic crops, and a beautifully designed square bale squeeze.


LINCOLNSHIRE Some of the most interesting and valuable workshop projects are the smallest, and on this visit I discovered a simple way to make a mobile drill press for a Wolf type power drill. One which enables the user to drill holes through heavy steel that’s in situ - girders, cross members, purlins in buildings, and machinery. This guy drilled a few thousand awkward holes to fix walling in a new grain store - and was drilling them as fast as his mates (one inside the shed, one out) could fix the nuts and bolts.

July: CHARTERED ACCOUNTANTS FARM AND RURAL BUSINESS CONFERENCE
Tax issues are becoming of increasing importance in farming. For example, the change in Capital Allowances from April 2012 from £100,000 to £25,000 may be widely known about, but do all farmers know what this is going to mean in practice, and what they need to think about doing well before the date? Similarly, people are well aware of the differences in taxation between sole traders and limited companies, but here again the actual figures are not so readily found. Company directors will take loans from the business, and these needed to be reconciled to avoid lodging funds with the Revenue until such time as the loans are paid off - but what are the alternatives? Farm vehicles are a favourite topic - should they be owned by the company or the individual? Here are just a few tax planning issues raised at this conference which we enlarge in the Financial Focus feature in the next issue.



Don’t miss our next issue, published Aug 8.          The annual subscription is just £15.40.
               You CAN afford it, and you WILL benefit from it.

Call 01994 240978 for all subscriptions.       Renew on-line from www.farmideas.co.uk

Could mega-farms compromise food security?

Why food security is best served by a large number of smaller operators.

Is it feasible the problems of Southern Cross care homes could be replicated in other sectors, including that of food production and farming?

The effects of sophisticated financing, lease-back, equity swaps, leveraged loan syndication, off-shore interests and ownership, and other structured financial products allows the big to get bigger, and in time reach a critical mass which means the decisions they take, or which are forced on them, liable to have a profound effect on the supply of the essential goods. In the case of Southern Cross, it's care for the elderly. Allow the same development in food production, it could be milk, meat, or cereals. 

In this article I look at the milk industry, its recent history and the direction it might possibly take. Dairy farming has been under huge stress for a decade and more, and the longer this continues the greater the likelihood of some major adverse event - the branch of the tree will snap under the strain. 

Practical Farm Ideas      Helping farmers improve safety for workers and children        Special Farm Energy Issue    

The dairy industry is a fundamental corner of UK agriculture. It supplies a vital ingredient for the food trade, both as liquid milk and milk products. It provides a significant proportion of the feed-stock of the beef industry, through beef cross and dairy bull calves. It is a major customer for the arable sector, providing a market for feed grains and also by-products such as  beet pulp, pot ale syrup etc. The dairy industry, in addition, has a valuable and world beating breeding arm, producing globally important dairy genetics. Finally, it should be remembered that it supports an engineering business, for milking equipment, forage machinery and preservatives including silage additives and silage film. 

Despite its size and importance, the present situation in the UK milk market is not, to use an overworked work 'sustainable'. The dairy industry in the UK is living on borrowed time, propped up by a cohort of farmers who continue to eke a living from their loss making businesses. The return they are getting on the capital invested is risible. They work long hours, and with livestock in their charge have greater responsibilities than those farming crops, in terms of health and welfare. 

Since the end of the MMB and it's central pricing system the market has been in turmoil. The milk business is increasingly in the hands of a small number of major multiples who exert their market power through processors and the farmers co-operatives. The result has been a contraction in milk price, forcing many dairy farmers out while a smaller number have expanded. National milk production has decreased, so that today output is approx 1bn litres below the quota threshold set in 1992. 

The milk price squeeze has meant the size of the smallest viable herd size has continuously increased. Many farmers see the only defence against decreasing margins is to expand the number of cows. While proposed 8,000 cow herds hit the headlines, gaining criticism from press and welfare organisations, a third of dairy farmers (2010 DairyCo Farmer Intentions Survey) were looking to increase production over 2010 - two-thirds were either staying the same or getting out.  

Running large herds is far from plain sailing, both from a cow welfare and an environmental point of view. Keeping cows in conditions so far removed from the traditional poses real fundamental moral questions. Should market forces, in an advanced and wealthy economy, be permitted to dictate such fundamental changes to the way animals such a dairy cows are kept? Is it progress to have a significant part of the national herd under cover 365 days a year, being looked after in conditions similar to battery hens? The UK dairy cow is currently on an inexorable march towards 50% being all-year housed within a decade or two, and the driver for this move is the decreasing milk price. Dairy farmers will adapt and adopt the measures it takes to stay in business, which, in today's perspective is to satisfy the demands of the supermarket consumer through a milk supply sourced at its cheapest. 

This is the dairy farmer's side of the equation. On the buyers side, the market is highly competitive. Milk buyers in the major multiples are not concerned with anything other than the price, quality and delivery of the deal they are making, and the processors and co-ops who they buy from are always in a poor bargaining position. They have a product with a short shelf life which has to find a market. Buyers have come to realise that sellers can be held over a barrel in terms of both time and contract details, all which improves their margins. As the food industry adopts the 'Just in time' techniques of other manufacturers, so buyers can wait to the last minute before finding a load that's looking for a buyer. 

In economic terms, buyers are paying little more than the marginal costs of production for much of their milk, and any industry which works on this basis is facing either long term decline or a major adjustment in trading terms.

The oil industry has distributors with no refining capacity - companies that buy petrol when it's a bargain and sell at a cut price. But the bulk of the fuel business is controlled by companies with processes that require a steady flow  -  refineries, transport and storage and distribution for a wide range of products. These main companies have basic requirements of raw material which need long term and sustainable contracts. 

In the milk industry the belief is that the goose will continue to lay golden eggs, even if she has to continue to give them away - but it won't last. As the next tranche of smaller dairy farmers - those with 80 to 160 cows - throw in the towel, so national production will drop another 1bn litres. Processors will be looking for milk, and, when it's not there, will respond by closing factories temporarily and then permanently. The dairy industry itself becomes increasingly uncompetitive with continental companies, who then become an even greater source of supply to the UK supermarket and their customers. 

The expectation is that a sufficient number of dairy farmers will take on major investments to create super sized herds run on battery hen lines. These farmers face a fine balancing act. There will always be a major risk of increases in interest rates, as their percentage of borrowed capital will be many times that of the smaller family unit. The super herds will be operated by specialist workers rather than the omni-skilled farm workers of today. 

This scenario will involve considerable pain and turmoil for those involved. Many of the retirees will leave dairy farming with few assets. Others will fail to make the leap from 250 to 1,000 cows, through management or financial problems. And there are the cows themselves to consider. Will the Great British public, which after all forced protection on the wild fox and the badger, which abhor and legislate on the puppy farming business, stand by and let the domesticated Daisy and Buttercup become complete units of production which never see the sun, lie in a field, get their tongue around a hank of grass? 

Milk prices need to be changed so they provide an honest income for honest producers. Dairy farmers need a sustainable reward for their core production, and this is true not in Britain alone, but throughout the EU, for the same situation exists in every milk producing country. The system must not be allowed to be exploited by brokers and middle men who deal in 'entitlements' or other forms of paper, for this leads to poverty in the exact sector which is in greatest need of protection. 

There are examples where such schemes have worked well - such as the sugar beet regime. Their problems concerning competitiveness with the Caribbean cane growers does not happen in milk. Our trading difficulties and ties with New Zealand and Australia seem to have waned in recent years. 

Some basic reorganisation to halt the decline of family farms has long term benefits for the world population as a whole. Family farms need men as well as machines, so populations are likely to be dissuaded from moving to the city, as has been the case in virtually every country, developed and undeveloped in the world. Family farms are diverse in production, create more wealth per acre, cater for local needs and supplies, reduce transport, storage and refrigeration costs of food, add to diversity both of diet and production systems. While involvement of the major international corporations involved in food is curtailed, the likes of Cargill, Monsanto, Bayer; WallMart, Tesco and Carrfour  and others will still have a sizeable cherry on which to bite. 

If the world is looking for a more sustainable source of food, it's leaders need to be looking at the smaller farmer as well as agri-business. 

It is of course inconceivable that a single dairy production company would get as large a share of the business as Southern Cross has in the care market. But concentrating production into herds of 1,000 plus cows is now not such a remote idea, and these farms can themselves merge into larger groups, using sophisticated finance such as we have seen in other industries. 

renew your subscription:  click

subscription queries:  email   editor@farmideas.co.uk