RABDF has submitted the following response to the National Food Strategy Call for Evidence
The Royal Association of British Dairy Farmers (RABDF) is the only UK wide charity solely focussed on helping to create a sustainable and profitable dairy farming sector. Thus we see this strategy as a major opportunity to establish a clear plan going forward rather than a range of diverse and often contradictory initiatives.
We also hope that this strategy recognises that UK dairy farmers produce and promote a healthy and nutritionally balanced product, with excellent animal health and welfare, into an effective dairy supply chain. RABDF is a UK wide organisation it’s therefore unfortunate that this is an England only activity.
Future dairy systems will call for evermore intelligent approaches to the simultaneous achievement of quality systems that:
· Minimise environmental burdens,
· Sustain high standards of animal health and welfare,
· Deliver nutritionally valuable products into well organised food supply chains.
The dairy industry is between a deteriorating past and a promising future, with Brexit complications have a huge bearing on the sector. The key for dairy farming is to continue to establish closer working relationships between themselves, processor and retailers.
It is easy to forget the importance of the dairy sector in the overall UK economy.
· Over 70,000 people are directly employed by the sector either on farm or in processing plants.
· Dairy farmers produce around 14 billion litres of milk each year (14.8% of the total value of UK agricultural produce) and £8.8 billion of sales at wholesale level.
· The dairy food group plays an important role in providing key nutrients to the diets of children and adults – protein, minerals such as calcium, phosphorus, potash and iodine and vitamins, particularly B2, B5 and B12.
The UK dairy sector is particularly dependent on continuing frictionless trade with the EU and particularly cross border trade between Northern Ireland and the Republic of Ireland.
All of the above is leading to great uncertainty for the future. Dairy farmers are not sure what is expected of them and hence why RABDF welcomes this National Food Strategy.
This uncertainty is made worse by the growth in very large, usually foreign owned, companies who now dominate the market. The two major dairy companies are Arla Foods, who are Danish owned, and Muller who are German owned. They dominate the sector and provide 94% of the milk market to supermarkets. Thus major retailers/supermarkets are trying to diversify using smaller independent processors but change is slow and piecemeal. Foreign companies account for close to 60% of the total UK dairy sales.
Only about 1% of farmers sell direct to consumers, whilst despite industry efforts only 6% of dairy farmers are in producer organisations (PIO’s).
About 50% of milk purchased off farm is processed into liquid milk and sold for the domestic market. 30% of cows milk purchased is used for cheese production. The rest going for milk powders, yoghurt, cream and butter.
Market Penetration
Dairy products can be found in almost every UK household and yet the industry has been slow to innovate. The UK spends more on dairy imports than it receives for exports. In other words we sell low volume excess products and buy in value added products (cheese, yoghurts etc).
In 2018 according to HMRC figures we imported £2801million but only exported £1652million leaving a trade gap of £1148million. Trade with the EU dominates with 78% of UK, mainly cheese, exports by value and 97% of imports by value coming from and going to other EU countries.
Nowhere is this more evident than in the cheese market. The UK has over 700 different name cheeses of which 15 or so have EU protected food name status. But in the European league table of consumption the UK is near the bottom at around 6kg/person/year. France, Germany, Italy and Greece consume more than double this figure.
Convenience packaging, ‘healthier’ cheese e.g. less fat/salt and enhance levels of natural components e.g. CCA, Omega-3 offer opportunities as do soft and spreadable cheeses.
Main Drivers for Consumer Choice
Every consumer survey always indicates that price followed by familiarity with product are the 2 major determinators affecting consumer choice.
With plant-based beverages gaining new attention and popularity among consumers, it’s easy to assume cow’s milk is losing ground in the dairy sector. In fact, plant-based milks only occupy a fraction of the total milk category, representing 4.4% volume share of the total market, according to the latest data from Kantar to the 52 week period ending 16 June 2019.
However what plant-based “milk” continues to show is that by innovative branding and marketing a dynamic sector can be created.
Unfortunately, traditional liquid milk is still seen as a “loss leader” in retailer terms. It is a staple food but despite a myriad of attempts to brand milk to the majority it is still sold in 4 pint poly bottles and is virtually unbranded.
Perversely most YouGov online surveys indicate that UK consumers believe that dairy farmers are doing a good job and would be prepared to pay more for their milk.
A More Diverse Market For Milk
Given the increasing diverse market for milk it follows that the dairy supply chain ought to be looking at clever branding opportunities about what is happening on farm.
Thus one could see a whole range of branded milk products based on increasing traceability/assurance and then allied to specific properties such as taste.
This would then give a much more diverse milk market which would tie in well with what is happening on the farm. At the moment there appears an almost disconnect between the farm and post the farm gate. A legacy of the Milk Marketing Board era.
The Way Forward
· Having an agreed National Food Strategy based on best available scientific facts and not perceptions would be a huge step forward.
· This then needs to be agreed by all English Government departments. The Department of Health still appears to have an anti-dairy stance.
· There then needs to be a really effective communications campaign. Even for those in the industry the Food and Drink Sector Council has been pretty anonymous.
· Finally, there needs to be a long-term plan not a short campaign and then move onto the next subject.
· Brexit will unfortunately continue to be a huge hurdle/obstacle in the development of a National Food Strategy. Unless/until this is sorted it will be difficult to make progress.