Dairy industry gets Government reprieve to avert ‘catastrophe’

By Michelle Perrett

- Last updated on GMT

The dairy industry will be working together after the Government relaxed competition rules
The dairy industry will be working together after the Government relaxed competition rules

Related tags coronavirus

The Government is to temporarily relax competition rules to allow the dairy industry to work together in the wake of the coronavirus pandemic

The news comes after a dairy crisis meeting was held last week between trade associations, representatives of the trade and the Department for Environment, Food & Rural Affairs (DEFRA), calling for help to avoid a “national catastrophe”. 

The pandemic has seen almost the complete loss of the foodservice and hospitality markets, meaning that some farmers had been forced to dispose of milk​. 

Last month, Dairy UK told Food Manufacture​ that dairy farmers would need more support from the Government due to the fall in foodservice demand. 

DEFRA said legislation would be laid that would allow the industry to adapt to changes in the supply chain, including decreased demand from the hospitality sector and reduced collection by retailers that have had to close. This follows a previous relaxation of competition rules to allow retailers, suppliers and logistic services to work together.


Address market challenges

This move, it said, would allow the industry to work together to address market challenges, avoid waste and maintain productive capacity to meet future demand. 

This could include sharing labour and facilities, cooperating to temporarily reduce production or identifying where there was hidden capacity in the supply chain for processing milk into other dairy products, such as cheese and skimmed milk powder.  

Dairy UK and the Agriculture & Horticulture Development Board (AHDB), would lead the work, it said.  

Environment secretary George Eustice said: “We’ve heard loud and clear our dairy farmers’ concerns, which is why we are further suspending competition rules law to allow dairy farmers to work together on some of the most pressing challenges they are facing. I am also urging farm businesses to access the loans that are available from their bank to support them in this period. 

We welcome our farmers’ heroic efforts in ensuring food supplies remain resilient and will continue to support them through this difficult time​.”    

Alok Sharma, business secretary, said: “Temporarily relaxing competition law for the dairy sector will mean farmers can work together to minimise waste of milk, and use it to make other essential dairy products. 

“This important step will help our dairy farmers weather this storm, providing support to a key sector in the British economy.” 

The dairy sector is the UK’s largest farming sector, with milk accounting for 16.85% of total agricultural output in the UK in 2018.  

Of this, approximately 50% of UK dairy sector output is fresh milk and, as such, accounts for a significant amount of UK processing capacity.  

More action

However, there have been calls for more action from the Government to help the dairy industry. 

Appeals for urgent action to save the dairy industry have been backed by the entire supply chain, including UK farming unions, RABDF, Dairy UK and the Provision Trade Federation. 

The group has written to Eustice to reiterate its support for the proposals put forward by the National Farmers Union to protect dairy farm businesses. 

It has called for a targeted grant scheme for affected farmers similar to the Retail and Hospitality Grant Scheme, a  fully funded, government run voluntary national production reduction scheme and engagement with the EU Commission to introduce market support measures, such as Private Storage Aid.

In the letter, they write: There are farmers unable to pay their feed companies and having to sell cows. There are dairy companies that, having lost all of their key markets, still have to deal with the milk and find a home for it in an oversupplied marketplace. ​ 

“We need action now, as well as a more considered response for the medium and longer-term measures. We cannot over-emphasise the urgency of the current situation. Unprecedented times call for unprecedented measures, as government is already demonstrating elsewhere.”

Meanwhile dairy farmers in Wales have raised concern that  water quality regulations published in draft form by Environment, Energy and Rural Affairs Minister Lesley Griffiths would push dairy farms ‘over the edge’

An emergency meeting of the Farmers’ Union of Wales Milk and Dairy produce committee said that a large proportion of the industry, which is already suffering severe impacts due to the knock-on impact of Coronavirus, would not survive if these regulations were to be introduced.


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