Jonathan Moore, Chairman of UFU Dairy Committee reported on the 4% expansion in global milk production – the increase in demand is only 2%. The price collapse in N Ireland is due to our total dependence on exports - the Chinese factor – the Russian factor – the currency factor. The industry must look to managing volatility through futures markets or long term contracts to create stability. They want to see EU use super levy income to help support the market through the current crisis. They are advising farmers to be prudent, think austerity and run a tight budget. The 5 year averaging for tax liability will help reduce tax payable.

Industry Speakers at UFU dairy summit
Industry speakers photo L-R: Trevor Lockhart, Dairy UK NI, Robert McCullough, banks representative, Michelle O Neill, Agriculture minister, Owen Brennan, Grain Trade Association, Ian Marshall, UFU president who chaired the summit.

Trevor Lockhart, CEO Fane Valley reported that processors were dipping into reserves to support farm prices. Russia took 1/3 of EU cheese exports – this market is lost and Chinese demand for milk powders is greatly reduced. The currency effect alone has taken 6p/litre off the milk price in N Ireland. Milk production is scaling back in some regions but world production is still well ahead of last year and pressure on farm prices will continue. Intervention is the answer in the short term.

Robert Mc McCullough, Agricultural Manager, Danske Bank advised farmers to get financial advice to understand the impact of milk price on their cash flow. What reserves are needed to get through this winter? - There are businesses which have never borrowed which will need help now. Volatility is here to stay – is your business able to cope with it in the longer term? For some producers this could be the time to get out of milk production.

Owen Brennan speaking at the UFU dairy summit
Owen Brennan speaking at the UFU dairy summit

Owen Brennan, CEO Devenish Nutrition said that dairy farms in N Ireland use 1M tonnes of feed/annum and while prices were at a 5 year low it could take up to 60% of the milk cheque to pay the feed bill this winter. Credit was being stretched but with an extra week costing £5M feed businesses will run out of cash. He warned of the dangers of cutting costs on cow care – reduced yields, poor milk quality and low fertility all cost money and can take a long time to correct. The factors which have driven down milk price are not within the farmers control – it is not their fault and they should not feel any sense of failure.

 He emphasised 3 important elements to survival           

1. Communication – Sharing information with bankers, suppliers and with family.                                

2. Budget - accurate forecasts, cash flows etc. know what is required to survive.                                    

3. Efficiency - Keep working on the key areas - milk quality, fertility, feed efficiency.

A lengthy question time was very capably handled by the speaker’s panel and it was notable that all stake holders in the sector were committed to a successful and profitable dairy industry in Northern Ireland and were working to make a positive contribution to this end.                                                  

This is uncharted territory for everyone and all businesses were having to share in the pain.

Greenmount College -    27th August 2015                                                                                              Chaired by UFU President – Ian Marshall.