UK dairy recovering after ‘dreadful’ two years: minister

Dairy production had started to ease back in a number of countries, and the UK market could expect a better equilibrium between supply and demand, George Eustice, minister of state at the Department for Environment, Food and Rural Affairs (DEFRA) told Dairy UK’s annual Dairy Dinner on Wednesday (June 29).

He comments came prior to First Milk's announcement that it had increased its ‘July A’ prices by 0.5 pence per litre (ppl), as a result of an “accelerated business performance supplement”.

It had also lifted its B prices from July by 2ppl, citing that current positivity in the market boded well for future milk price moves.

Eustice said: “I don’t want to make any rash predictions here, but we have now seen production starting to ease back in many countries, including the UK, where we expect production to drop by about 4%.

“It’s not going to change overnight, because we put a huge amount of dairy products and skimmed milk powder into intervention – and that has to come back out in the market at some point, which may make the recovery sluggish – but despite a dreadful two years, there are now signs that things might be turning the corner.”

‘Extraordinary week’ in politics

An active Brexit campaigner, Eustice conceded it had been an “extraordinary week” in politics.

“It was Lenin who said: there are decades where nothing happens, and there are weeks where decades happen. That certainly seems to have been the case this week,” he said.

However, he believed leaving the EU would give the next prime minister and government the opportunity to start with a “clean-sheet”, rather than trying to reform the Common Agricultural Policy.

“The government will be able look at how best we can deliver for our environment, what are the right types of policy mix that would enable us to manage risk and volatility, how can we promote science and technology to deliver profitable farming and improved farm incomes.”

Plan in place

However, Eustice claimed it was “absolutely essential” that when things started to recover, we had a plan in place for the next downturn and the next bout of volatility.

“At DEFRA, we are doing an extraordinary amount of work to try to establish a new futures market in dairy, so that the next time there is a downturn, we are better placed to be able to deal with it.”

Dairy UK chairman Dr David Dobbin used the event to suggest Brexit had created “considerable uncertainty and concern, and a number of fresh challenges”.

He said: “More than ever before, we need to ensure that our dairy industry is market-led, that it’s innovative, internationally competitive, and most importantly of all, that we’re open for business, whether that business may take us and lead us to.

“We need everyone in the total supply chain to be aligned to that sort of thinking, and we need our government and other key agencies to work towards a shared vision.”