Competition rules temporarily relaxed to allow dairy industry to avoid waste

20 Apr 2020 --- As the coronavirus pandemic continues to have a pronounced negative impact on dairy sectors around the world, the UK government will temporarily relax elements of competition law to support the dairy industry through the outbreak. This will mean farmers can work together to minimize waste of milk, and use it to make other essential dairy products. Competition rules to allow retailers, suppliers and logistic services to work together have previously been relaxed and while this has already allowed the dairy industry to redirect some of their supplies to retailers, this latest move will allow further collaboration between dairy farmers and producers so they can avoid their surplus milk going to waste.

This could include sharing labor and facilities, cooperating to temporarily reduce production or identifying where there is hidden capacity in the supply chain for processing milk into other storable dairy products such as cheese, butter and skimmed milk powder. 

The intention is that the industry will work together to address current market challenges, avoiding waste and maintaining productive capacity to meet future demand.

With the UK’s dairy farmers producing over 40 million L of milk every day, the legislation will allow the industry to adapt to changes in the supply chain including decreased demand from the hospitality sector and reduced collection by retailers who have had to close as part of lockdown measures. 

Dairy UK and the Agriculture and Horticulture Development Board (AHDB) will now lead work to bring the industry together to identify spare processing capacity, how to stimulate demand and how production could be temporarily reduced.

“Our dairy industry plays a crucial role in feeding the nation and it is essential that they are able to work together at this time. We’ve heard loud and clear our dairy farmers’ concerns, which is why we are further suspending competition rules law to allow dairy farmers to work together on some of the most pressing challenges they are facing. I am also urging farm businesses to access the loans that are available from their bank to support them in this period,” says UK Environment Secretary George Eustice.

A number of sectors in Europe and the US are facing heavy challenges as a result of the coronavirus outbreak, mainly because of the sudden and steep decline of markets, such as the foodservice industry, caused by lockdowns and quarantine measures. 

Earlier this month, Europe’s dairy and livestock sectors spoke out about “deteriorating” market conditions. Producers and their cooperatives were demanding urgent action from the European Commission including calls for extraordinary measures to mitigate the crisis emerging within the agri-food industry.

The dairy sector is the UK’s largest farming sector, with milk accounting for 17 percent of total agricultural output in the UK in 2018. Of this, approximately half of UK dairy sector output is fresh milk and as such accounts for a significant amount of UK processing capacity.

By Gaynor Selby