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Urgent support measures needed to save dairy sector

FUW Milk and Dairy Produce Committee Chairman Dai Miles. (Photo credit: Huw John)

The Covid-19 situation has led to a crisis in the dairy sector and urgent support measures are needed to save the industry, the Farmers’ Union of Wales has stressed. 

Following the closure of pubs, clubs and restaurants across the UK at the end of March, some dairy processors supplying the service sector found that their market had disappeared and orders have been cancelled overnight.

The Government enforced closures have led to rapid drops in the spot market price for milk and some farmers have been forced to dispose of their milk down the drain due to processors not being able to make a collection.

FUW Milk and Dairy Produce Committee Chairman Dai Miles said: “The situation is critical. Many farmers who have contracts with those dairy processors had their price cut, in some cases they are facing delayed payments and others had no choice but to dispose of their milk.

“Those farmers will also not be compensated by their insurance companies as ‘Market Failure’ is not covered by policies. Therefore all the cost and loss is borne by the producer.

“This is not just about a few dairy farmers but the ramifications it will have on the whole dairy sector are immense.There is an urgent need for support packages to be made available immediately. ”

Around 25% of dairy farmers in Wales supply processors who have been affected by the loss of the service sector.

In teleconferences with the UK and Welsh Government, the Union has stressed that there are many who are unprotected and their businesses will fail if no help is offered.

“Some of these dairy farmers are not eligible for the existing financial support packages announced by the Treasury and failure of these farms will have serious implications for the food service supply chain when the markets revert to a more normal situation,” added Dai Miles.

Whilst it is hoped that the market disruption will be short term, it is essential that both production capacity through support for dairy farmers and the processing capacity in Wales is protected and maintained.

There is no one measure that will solve the problems alone and a package of measures needs to be looked at, Mr Miles stressed.

He added: “Some of the measures we have asked for include a tailored financial support package from the Treasury with farmer friendly guidance, an urgent short term financial package to reimburse those dairy farmers having to dump milk to their standard litre price, intervention and Private Storage Aid, as well as stopping the rationing of dairy products in the retail sector.

“Food security is an issue that has been brought into focus and highlighted during this pandemic with panic buying and empty shelves and we need to ensure both the producers and processors are still in business to feed the public when it is over.

“This is urgent and we need the Government to put measures in place urgently, this situation is not going to get better any time soon and we don’t want to see our dairy industry decimated. All options must be on the table and be seriously considered.”