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DFOB failure bad news all round

Date Published: 04/06/2009

The news that Dairy Farmers of Britain has sunk into receivership is extremely sad. That this can happen in a country that has a world-leading reputation and proud heritage in dairy production makes it an appalling state of affairs.

Thousands of farmers across the country are going to be waiting on tenterhooks to find out what is likely to happen and whether they will continue to have an outlet for their product. Included in this are many organic farmers and while organic is only a relatively small part of the picture, consistency of supply is even more critical in the sector, because you can’t just turn it on and off.

If we lose farmers out of organics because of this, they can’t simply re-enter if an opportunity arises – they’ll need to re-convert over the course of two years. Maintaining a balance between supply and demand for organic milk is a delicate thing. At the moment, most indications are that we are fairly close to some kind of equilibrium (it depends who you talk to though).

The problem seems to be in the supply chain and the absence of a fair price being passed back to the producers, even though their costs have risen sharply in recent times. Would we all really be that upset about paying a few pence more for a pint if we knew it was going back to where it was needed?

The trouble is, the big retailers can’t move the price on one of their key benchmark products because it doesn’t play well at all with their customers. The answer is for them all to put up the price, but competition law prevents that from happening in any concerted way. They can’t talk together about things like that. The scenario provides good protection for consumers, but means that market forces at the retail end of the chain are really the only thing determining price – and that’s distorting the rest of the chain.

The good news so far is that the administrators of DFoB are working to try and ensure collections from the member farms continue as normal while they work out whether parts of the business can be sold off. Fingers crossed that they succeed.

Here’s a round-up of some of the coverage on the issue and we’ll continue to keep an eye on it:

Farmers Weekly

Farmers Guardian

Financial Times

Daily Telegraph