Dairy farmers deserve a minimum milk price

The noted think-tank, The Adam Smith, makes this comment about milk prices: 

"Of course, the real background to this is that, as has been happening for the past couple of centuries as farming techniques improve, milk has been getting cheaper and cheaper to produce. And as has been happening over that time the higher cost producers have been pushed out of the market by the lower cost ones. This is, after all, the universe’s way of telling you to go do something else, when the price of what you produce is lower than the cost of producing it. That’s what is devastating farming, we’re in general becoming more efficient at it.

And the supermarkets are, through their subsidy, restricting this process which is the very opposite of devastation, isn’t it?"

The article also says this:

"Retailers insist they are funding the cost of the price reduction from their own profits, rather than paying farmers less. Many supermarkets have guaranteed the price farms receive will stay above the cost of production."

http://www.adamsmith.org/blog/economics/so-how-does-this-work-then/#comment-22867

The Adam Smith writers say they are confused, and they are not alone. 

Here's a major problem to start with - supermarkets talk in pints; farmers talk and get paid per litre. There are more than two pints to the litre! The farmer is getting paid 20p/litre today and the supermarket sells at 22p/pint. The supermarket is therefore selling at more than double the price paid to the farmer. They call their 20p markup a ‘loss leader’, yet this is the total earned by the farmer who has to finance land, buildings, labour, machinery, fuel and power, vets and medicines, plus finance the cow within the 20p earned. 

The dairy processor has the job of collecting the bulk milk from the farm tank, pasteurise, bottle, and deliver to the supermarket – which puts the bottles on the shelves. The store orders when stocks are low and expects a near instant delivery, so little goes to waste. The dairy has to balance supplies with markets, diverting milk to processing into butter, cheese and powder. It’s clear the actual costs carried by the farmer outweigh those of the other players.

Milk is not a price sensitive product. People don’t double their purchase if the price is reduced, nor do they reduce it if the price increases. Supermarkets use it as a loss leader 

1. because shoppers remember the price 

2. because the structure of the market that consists of a handful of competing processors, allows them to do it. The MMB arrangement was fairer to farmers as they had a voice in pricing. It was brought in in 1933 after much the same issue – dairies paying below production costs – and more sheninigins besides.

Solutions: 

1. industry agreement or even legislation which provides a minimum farm gate price that’s works like the minimum wage. 

2. Supermarkets being shamed into using milk as a loss leader. 

3. Dairies reducing supplies to supermarkets so stores are empty.
The EU Commission might well see this as a prosecutable offence - as infringing their rules of commercial competition. The industry needs to engage some smart lawyers who write the clauses so this won't happen. 

How I wish Meurig Raymond (NFU President) could provide a similar explanation.

Reducing costs in beef sector

Practical solutions to cost problems in beef sector

On today's BBC Farming Today programme (Monday, June 30, 2014), presenter Charlotte Smith talks to Professor Liam Sinclair from Harper Adams who makes some interesting points:

1. There's a wide gap in efficiency between the top third and the bottom third of beef and sheep producers

2. Capital costs are very variable between farms

3. Some beef and sheep farmers weigh stock infrequently. "If you can't measure it you can't manage it". 

Some effective solutions built in the farm workshop 

Specialist equipment can add significantly to the costs of production for low margin enterprises such as beef and sheep. Some farmers get the penny and the bun by making long-lasting, durable equipment in their own workshops.  

A. Mobile handling with incorporated weigh crush. 

Driving cattle from grazing land to the handling facilities in the yard is takes time and effort. Yet a

Farming opportunities: 10 developments you must consider

Today's opportunities in farming  

Bankers, politicians and other commentators with an income not directly gained from the land have joined a chorus singing of the wondrous opportunities in farming. Farmers on the other hand, with mud on their boots, and cattle and corn to pay the bills,

Keeping walkers safe from grazing cattle

Keeping walkers safe from grazing cattle

On Wednesday May 14 2014 Peter Jakeman, 62, from Callington, Cornwall, was walking on a footpath in Derbyshire when he was trampled to death by cattle. This is not the first accident of this kind - in fact the UK average is one death from stampeding cattle and a hundred or so injuries per year, and very many more near-misses.  Enough to make any farmer with footpaths on their grazing land to take notice. 

More ideas for greater safety

The constant accident rate is accompanied by an unchanging set of instructions to walkers - keep dogs on a lead but, when the cattle charge, let them loose. Give cattle in the field a wide berth. Don't run away, don't be obtrusive. The instructions are not wholly effective. So here are some further ideas which could help reduce the incidence of cattle chasing, and occasionally injuring walkers.

Milk after quotas

Peter Lauritzen is chief executive of Arla Foods, the UK arm of the Danish-Swedish co-operative dating back to 1880. Arla now has 3,800 UK farmers as members, out of a total 13,500, and their UK business buys more than 25% of the milk produced in the UK. 

An article in the Times (Jan 18, 2014), says that Mr Lauritzen anticipates a torrent of milk being produced after the quota regime ends next year, and a consequent 'price war' driving farm gate prices, and farmers profits lower. Practical Farm Ideas has published similar forecasts for more than two years,

Farm Composting Made Easy

Farm Composting Made Easy

Composting is not a regular farm activity. Conventional farmers get nutrients from chemicals and through crop rotations, as well as spreading dung from their livestock enterprises, should they have them. Organic farmers, who are forbidden the use of chemical fertilisers, have to rely entirely on crop rotations and mixed farming systems which produce quantities of dung and farm yard manure. Composting, the accelerated rotting of organic material, is mostly associated with smallholders and allotment keepers.

Full scale farmers are finding compost a good source of soil nutrient, and a wonderful soil conditioner. Composting dung and farm yard manure produces something far more beneficial than fresh or rotted dung. Material such as straw, green waste from council collection, waste from vegetable and fruit growing and processing, this and more can be converted into compost. Apart from its value to farmers, there's an increasing commercial market, created by the future ban imposed on the digging and use of peat. In the next two years, the horticultural industry will be searching for a substitute to go in the pots of bedding and other plants.

Composting is set to become far more main stream than at present.

• Farmers and advisors are recognising that the condition of soils is deteriorating, both on arable and grassland. Soil is losing organic matter. The contribution of farm yard manure, or cattle slurry, is a fraction of what happens when the manure is turned into compost. The elements of phosphate and potash are both made more accessible to plants, and the compost makes a big improvement in soil structure, leading to increased worms and other biological activity.
• The rising cost of chemical fertilisers is making compost and other natural sources of plant nutrients increasing valuable, and therefore popular. 

The current issue of Practical Farm Ideas magazine features a home built compost turner - one which would suit a farm with up 600 acres. The project requires:

• general workshop skills, 
• parts which can be sourced locally for scrap metal prices - the main component is a heavy duty lorry axle.
• a week or less of work  

So instead of starting the farm composting with a substantial investment in a machine to turn and aerate the material - it's a tedious and poorly done job using a loader and bucket  - a turner can be made with a few components and a few days in the workshop. The machine we feature has turned 25,000 cu metres over the last few years, and has the ability to turn more. 

The home built compost turner uses an adapted lorry rear axle and drive shaft to turn the windrow of compost

   

The PT 170 composter is a significant farm investment 

Soil with low organic content, few worms, little biological activity

This soil is has been managed differently, with plenty of organic material resulting in a high worm count and good water retention

As chemical fertilisers become increasingly expensive, farmers who are wanting to reduce costs and save money will be turning to ideas such as compost and other methods to improve the fertility of their land through biology rather than chemistry. 

Building a compost turner in the workshop is the kind of project which will pay huge dividends over the next few years. The home made machine can be replaced by something bigger and more costly when composting experience is gained. 

Click HERE for more information on the home built machine

Further info:

Practical Farm Ideas is a good source of information on reduced tillage systems. There's a feature on Cover Cropping in Vol 22-1 which we forecast will become "The Next Farm Revolution', because it answers so many of today's problems: declining soil condition; increasing inputs especially of diesel, fertiliser and pesticides; increasing need for heavy expensive machinery; reduction in habitat for birds, wildlife and insects. The magazine is so enthused by the topic of cover cropping the next issue has a further feature that shows how a 3,000 acre Midlands farmer has made the conversion, has got rid of his big machines such as the Caterpillar Challenger 875C (which could use 120 litres of diesel/hr towing the Simba Solo), the John Deere 8530, and now does the whole farm with a couple of 240hp tractors, and at a push says he could do it with just one.

A subscription will ensure you receive this interesting farm publication through the post.

Mike Donovan

editor, Practical Farm Ideas

11 St Mary's St, Whitland, Carmarthenshire, SA34 0PY  T: 01994 240978

28 Brampton St, Ross on Wye, Herefordshire HR9 7EQ   T: 01989 218268

T:  01994 240978       M: 07778 877514 

www.farmideas.co.uk     editor@farmideas.co.uk   Twitter: @farmideas    

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Bovine TB moves up a gear - to the concern of all involved

New figures published today show an increase of 9.6 per cent in cattle slaughtered for TB in England, which has now reached a figure of 38,010. It provokes a number of serious concerns.

To summarise the problem:  The cost of compensation to the taxpayer rises as the costs in the following categories:

1. The compensation paid to farmers

2. Costs of testing - vet visits to farms etc

3. Costs of badger and other wildlife controls

Added to this is the cost to the farmer of lost sales of cattle and milk interruption, plus the costs of herding for testing, and associated weight losses. 

Thorny question of agricultural wage controls

 NFU deputy president Meurig Raymond is firmly behind the abolition of the Agricultural Wages Board saying "Removing this separate structure seems entirely consistent with modern notions of workers' rights, industrial relations and business management." 

He says few farm workers receive the minimum.....   

Cleaning machinery prevents spread of seed and animal disease

Taking unwashed machines from one farm to another risks spreading disease

Moving farm machinery from one county to another, from one farm to another farm, or even from one field to the next field, has the real possibility of transferring seeds and diseases that can affect both plants and animals. How easy it is to finish one job, pack the harvester or spreader for transport, and drive off down the road to the next farm - or load the machine onto a truck or trailer and move it hundreds of miles to the next farm which needs the service. 

Winter work on grassland will pay dividends

Some timely ideas for grassland farmers to think of doing now

A 'Think Piece' Blog:  Traditional grass management involves doing nothing over the winter months. Farmers wait until the soil warms up in the spring, when fertiliser is applied and the roller and the chain harrow get their annual outing. This Blog suggests that farmers who forget about their grassland over the winter are missing a trick. There's plenty of planning, and also when conditions are right some field work which will pay dividends in the following season.

Winter is the time for livestock farmers to plan the next season's grazing. Six months from now cattle and sheep will be getting much if not all their feed from the grass you grow, and the more pre-season preparation you can do the better grass production will result. Stock will grow, gain condition and provide financial returns on low cost grazing. 

What areas of the grazing need to be checked, and what can I do about it in the cold winter months?

Reducing cow feed costs by up to 10%

Feeding cattle is a skilled job

Many farmers get 'the boy' to do the feeding. He doesn't mind doing it - it's mechanical and not hard work. Neither is it too complicated. He can do it unsupervised. Unlike milking, where a mistake can lead to a disaster, feeding has fewer pitfalls.  So milking is seen as the most important work on the dairy farm, and even in a beef unit. feeding is often a routine left for someone who's had little or no training. 

Think again. Feed is the most costly input in both milk and beef. The combined cost of bought in concentrates and feed materials, plus the home grown or bought in forage is greater than the cost of labour or anything else. 

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

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