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Desperate times for U.K. dairy farmers

Just to give you an idea as to how bad the dairy situation has become in the U.K.: milk is now cheaper than bottled water in British supermarkets. A survey released Monday by “The Grocer” magazine found certain packages of semi-skimmed milk were selling for 43 pence per liter and bottled water is 44 pence per liter.

A price war among the four major U.K. supermarket chains started almost a year ago as a counter to cheaper milk coming in from the European mainland. As the U.K. grocers lowered prices, they have reduced what they will pay which in turn has forced dairy processors to reduce what they pay to farmers.  These are the lowest farm milk prices in eight years and for most dairy farmers, the pay price has fallen below the cost of production.

The latest blow came last week when Scotland-based First Milk dairy co-op announced it was delaying farmer payments for two weeks due to cash flow problems. More than 1,300 producers did not get their milk checks on Monday, this could be the “last straw” for some financially-strapped dairymen.  The U.K. lost half of its dairy farmers in the last ten years and analysts say it could halve again in the near future if things don’t turn around.  60 producers went out of business in December leaving around 9,950 in the kingdom.