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Business Review 2006 from
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Dairying: No licence to print money
Paul Houz»
Dairy farmer
Behind the picture postcard views of beautiful Jersey cows peacefully grazing this green and pleasant Island of ours is a web of supply and service businesses, at the hub 33 dairy farms and their co-operative marketing arm, Jersey Dairy.
The words, 'lucrative' and 'goldmine' are most certainly not often associated with the modern dairy industry; historically the business has rolled along with modest profit margins and heads just out of the water financially. During the 1990s the industry's fortunes improved and the more successful farms modernised and grew. As the decade closed the competition for market share, particular for our export products became a good deal more difficult. The fact that the export mini-pot market collapsed under intense pressure from imported Irish milk packaged by brand new EU funded dairies is now history, but the legacy of the slow adjustment to restructure our production level is still being felt. Hindsight is wonderful thing, but the struggle to recapture that market (at a loss) has taught us the lesson, if you want to pick a fight, choose a level playing field.
Having readjusted our production down to 14.5m litres p.a. our plan or 'road map' for recovery has gained almost universal approval, government is hugely supportive and sympathetic to our mission but States spending constraints mean funding will surely diminish year on year after 2008.
Cost cutting both on-farm and at the Dairy has been painful but essential, resulting in a very lean business, too lean some would argue,.
Our customers naturally continue to want the highest quality products at a fairest possible price. However, 'fairest' in the eyes of some consumers has nothing to do with the cost of production but more to do with what others outside the Island are paying for similar products.
Welfare
People, rightly want the best standards of animal welfare and environmental management; here we have a great responsibility, by and large our record is good and indeed getting better, but our PR often falls well short of the mark, we farmers do not do enough to advertise the contribution we do make. Farming small fields surrounded by trees, hedgerows and grassy banks, in not always convenient or indeed efficient but Jersey agriculture will happily evolve with the landscape we inherited. The last thirty years have seen huge strides made to enhance the countryside with the massive tree and hedge planting exercises that are only now becoming more appreciated, not only by islanders and tourists but the wildlife too.
Market demand and good old common sense mean conventional farmers are now adopting large chunks of the organic ethos, with far greater reliance of natural manures, bio-friendly pesticides, better waste management, wildlife habitats and the like. Contrary to what is often perceived (or reported in the press) the increased level of cooperation between many dairy farms and the potato sector is, I feel, at an all time high, this ensures the best use of the Islands limited land resource and importantly it continues a sound rotational cropping programme to maintain natural soil fertility.
There can be little doubt that Dairy Industry is a forward thinking sector with very clear plans for future. Production costs, both on-farm and at the Dairy have been drastically reduced effecting price stability in the shops but a period of new investment now beckons on many farms to ensure long-term success. Despite less government subsidy, the States need to continue to help facilitate this recovery road-map which includes moving the dairy to a more efficient and compact premises, enabling cattle breeders who wish, to use International Jersey genetics while continuing to give financial help with business development and environmental initiatives.
Career
Given all of this, and a fair wind the long-term prospects for the industry could be very rosy indeed. Cherry picking just some bits of the plan may have dire consequences. Only sustained farm profitability will offer career opportunities to a new generation of dairy farmers.
The Jersey Dairy Industry is a relatively small business, and I have no doubt that 'united we stand, divided we most certainly fall'. The management of the Dairy are totally committed to developing new products and markets and the acid test for success can only be the delivery of a fair deal for consumers, producers and the Jersey countryside.
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