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The Government has continued to work closely with farmers, retailers and manufacturers to help with the prolonged period of low prices experienced by the dairy industry in the last 2 years. Wholesale prices have started to improve sharply and we have also seen some improvements in the UK farmgate milk price, albeit from a very low level.
The long-term outlook for our dairy industry remains positive with strong growth in global milk demand forecast to continue until 2025.
The Government cannot dictate prices but has sought to help dairy farmers manage risk. We have introduced a new system of extended tax averaging, allowing farmers to choose whether to spread their tax over a two or five-year period. We are exploring opportunities for a dairy futures market and better branding and labelling in supermarkets.
The Groceries Code Adjudicator (GCA) appointed in 2013 oversees relationships between supermarkets and their suppliers to ensure large supermarkets treat their suppliers lawfully and fairly. We have invited evidence on the case for extending the remit of the GCA to provide more support for farmers and will consider any representation we receive. The dairy industry’s Voluntary Code of Practice has also made a positive contribution in developing a fair and balanced dairy supply chain, helping farmers to secure fairer contracts with their milk buyers.
The Government is committed to working with industry to develop new market opportunities. Government itself is now buying more British food as a result of our reforms – more than 90% of the butter and cheese bought is made from British milk generating £11m of business for our dairy industry. Further afield, we have been opening new export markets where we know there is a huge demand for quality British dairy products, and we are working to maximise this opportunity by pushing the British dairy brand with the launch of the Great British Food Campaign, and designating 2016 “The Year of Great British Food”.