‘It is unsustainable’: soaring inflation squeezes budgets of UK dairy farmers

theguardian.com:

“Something has to give and if the milk price doesn’t give, then the producers will,” says Oxfordshire dairy farmer David Christensen in a stark assessment of the peril his industry is facing as soaring costs push farm finances into the red.

Christensen, whose family business manages a herd of about 1,000 cows, says costs were already going up as a result of the upheaval caused by the pandemic and Brexit, but the war in Ukraine has “turbocharged inflation to levels the like of which I’ve never seen in 30 years of farming”.

He is a member of Arla, Britain’s largest dairy co-operative, which has sounded the alarm as the financial squeeze forces UK milk production to fall – a trend that could threaten future milk supplies.

Ash Amirahmadi, the managing director of Arla Foods UK, said producing fresh milk had for some time been delivering “little to no profitability for farmers” but the situation was now acute as the Ukraine crisis stoked farm cost inflation.

“It is unsustainable,” he said. “The cost of producing milk is increasing like never before and our farmers are continuing to experience significant inflation. The risk of that is about the milk supply because farmers are now producing 4% less milk than they were a year ago, having had seven to eight years of growth.”

The most recent official figures show that over the past year the cost of a pint of milk has risen by 7p to 49p – a 17% increase. However, the price of milk in shops last year was lower than in 2012, even though production costs have increased.

The price that consumers pay is different to the amount farmers receive, and they are earning more than before. In the past year, Arla has increased its farm-gate prices by 31% to nearly 38p a litre, but costs are still