European Dairy Farmers Congress 2011: Adapting to the Market

The 2011 European Dairy Farmers (EDF) Annual Congress was held in Stoneleigh, England from 30 June to 2 July.  I attended the Congress with four delegates from United Dairy Farmers and we were joined by over 300 others, mostly dairy farmers, from 20 different countries.  Stoneleigh is a special place for EDF because it is was founded there 20 years ago with 63 people attending the first Congress.

The theme of this year’s much bigger and internationally diverse Congress was ‘Adapting to the Market’.  I reflected on this theme as I escorted delegates through the crowds in Birmingham airport and criss-crossed miles of congressed motorway. Yes, the GB marketplace is truly massive with about 64 million consumers.  Retail statistics also show the dairy sector is only second to the alcoholic beverage sector in terms of sales in GB.  Unfortunately even with such a consumer base and demand for dairy products, English dairy farmers have not prospered in recent years.  Since EDF was founded in Stoneleigh, English dairy farmers have been going out of business and, in the last ten years alone, the number of dairy farms has almost halved with year on year reductions in cow numbers and milk production. Many farmers lay the blame at the feet of the supermarkets and in particular the ‘big four’ who dominate food retailing in GB.

Despite this gloomy backdrop, I met and visited some English farmers who had bucked the trend. They were profitable, growing and hopeful about their future.  What makes these farmers different?  Right at the start on the Congress, Jean Francois Verdenal, the President of EDF, pointed towards the secret of their success when he encouraged delegates to see with two eyes - one eye on their cows, the other on the marketplace.  

Most dairy farmers in England are faced with a range of milk contracts. No doubt this makes life complicated but, as I discovered, it also provides them with the opportunity to align their business to the needs of a specific market.

I visited four farms, all of which were supplying the liquid market but with three different types of contracts. The first farmer, Andrew Farrant, was on an ‘invitation only’ Dairy Crest contract for the up-market Waitrose Supermarket. The main focus of the contract was on level supply and to do this Andrew was calving his 520 cow herd all-year round. He recognised there were extra costs associated with this approach compared to block calving, however this was balanced by a premium milk price. For the year up until the end of March 2011 he received a milk price of approximately 29p/litre.  The EDF costing system uses a traffic light system to indicate performance with green indicating performance above total EDF dataset and red below.  As expected, UK farmers are used to seeing red in the milk returns section although most usually score well in the cost of production sections.  Interestingly Andrew’s graphs were almost exclusively green, he had controlled of costs while capturing the benefits of a premium market.

Our second farmer, David Christensen was also producing for a liquid milk contract.  However his contract was through the Milk Link cooperative and was not linked to a specific supermarket.  Whilst his milk price was about 2.5p less than Andrew Farrants, there was no stipulation in his contract for a level supply. David is in the process of changing his 600 cow herd from a year round calving herd into an autumn block calving herd because it is the most profitable system in this drought prone region. This change was disrupting financial performance in the short term and, as a result, there were more red lines on David’s EDF graphs.  Despite this, he is confident that once he stabilises his calving pattern he can outperform Andrew’s year round calving system.

On our second day we visited two farms, the Pilkington Family and Wil Armitage, both of whom were producing into the organic milk market. In recent times with the consumer focusing on value, organic milk has not been able to secure a significant premium over conventionally produced milk.  In fact the price received for the year up until the end of March 2011 was the same as Andrew Farratt’s Waitrose contract.  While both farmers were farming organically their approach was very different - the Pilkingtons had their 350 cross-bred cows on a low cost grass-based system while Wil Armitage had his 250 Holstein cows on a higher input system.  With organic concentrates costing £420/ tonne at present, Wil’s higher input system was being challenged; indeed he was debating whether he should return to conventional production.  His calculations indicated that he needed a premium of at least 6p /litre to remain in organic production.

Every farmer we visited emphasised the importance of their particular system. At one workshop I met Andrew Stevens who told me about one of his units, Leaze Farm in Gloucester.  On this unit he farms 345 cows in an autumn block calving herd. By block calving he contests that he can treat his herd as one cow and simplify his management.  He was also an advocate of self feed silage using a clamp of grass silage, straights and maize with an electric wire feed barrier.  Young farmers in the audience were amazed at his approach; they remembered their fathers and sometimes their grandfathers talking about this.   Andrew’s approach may appear old fashioned, but there is nothing outdated about his herd’s performance because year on year he is among the lowest cost of production in Europe.  Andrew, like a number of other farmers I met, has recently taken on a new unit and is seeking to replicate the success of Leaze Farm.

All the farms I visited were either in a long term lease or in a tenancy agreement.  As I answered queries from European farmers on the uncertainty of regular rent reviews and the prospect of tenancies  ending, it brought home to me that these farmers did not have the business (or even emotional) security that land ownership brings.   But what they lost in security, they gained in business focus in their farming operations.  David Christensen explained that while his landlord, Oxford University, had benefited from increases in land values in England, his focus was exclusively on ensuring his farming efforts generate as much profit as possible.  As a result, yards, buildings and slurry stores could be best described as simple and functional. On the Pinkington Farm they had an outdoor cubicle house for young stock with sand based cubicle beds which worked well.    Andrew Farrant had a large rotary parlour, housed in a simple shed, was direct to line without  milk meters yet it could milk 500 cows in two hours.

An EDF Congress is not just about lectures, workshops and visits, there are plenty of opportunities to eat, drink and chat. One evening I was speaking to one of our host farmers and the conversation turned to family. As he spoke about his young family he mentioned that he had made it his priority to finish at 5.30pm every night.  He wanted to eat with his family and be part of their lives, involved in helping with home works and the normal running to and fro from various activities.  What particularly impressed me was his staff also finished at this time.   His cows were working for the people not, as so often is the case, the other way round.

As I reflect on my few days at Stoneleigh I look back with genuine respect for the farmers I met. Over the years they have all faced a very tough marketplace and with many of their colleagues falling by the wayside.  However, those who remain at the top of their game are among the best dairy farmers in Europe with really interesting stories to tell.

If you would like to find out more about European Dairy Farmers visit www.dairyfarmer.net.

Rotary Parlour at Andrew Farrant’s Farm

Enjoying lunch at David Christensen’s farm

Open air cubicles at the Pilkington Farm

Wil Armitage in a field of clover

Matt Pilkington explains how to use a plate meter