Defra is working closely with the dairy industry to manage the impact of Covid-19. Though demand for milk and some dairy products has increased in supermarkets, farmers supplying milk to processors that sell into the food service sector have seen a significant reduction in demand.
Between 5 and 10% of total milk production goes to the service trade and there is therefore a small proportion of milk production that currently has no home. The vast majority of Britain’s dairy farmers continue to supply their contracts at the usual price. In order to support affected farmers, we have eased some elements of competition law to make it easier for processors to come together to maximise production, processing and storage efficiency and ensure as much product as possible can be processed into high quality dairy products.
We have asked the Agriculture and Horticulture Development Board (which supports the interests of dairy farmers) and Dairy UK (which represents the processors) to work with farmers and processors to ensure that the industry can benefit from these easements. We stand ready to support them throughout this pandemic. This approach will allow the market for milk to adjust to the change in demand for milk while allowing production to be restored when shops, restaurants and pubs are able to open again.
The Government took a number of early emergency steps to support dairy farmers and the wider sector. These included designating employees in the food sector as key workers and temporarily relaxing the normal rules on drivers’ hours, enabling the sector to keep supply chains running, including deliveries from farm gate to processors.
The Government’s Covid-19 Business Interruption Loans scheme is available to the dairy industry. Defra has held urgent discussions with the major banks to ensure they understand that farmers, milk buyers and milk processors are eligible for this scheme and communications are being prepared to increase awareness across the dairy industry.
We will continue to engage closely with representatives from all parts of the dairy supply chain to support the sector throughout this challenging period.