Cause to cry over spilt milk

OVER the last few years all States departments have been told to find ways to reduce their revenue spending.

One way the Commerce and Employment Department chose to meet their particular target was to slash the direct support they provide to local dairy farmers by 50% in staged reductions.

That process has now started and the consequences are becoming manifest. It's not pretty and it's only going to get worse. Milk prices will spiral while farmers struggle. A lose-lose situation. When the States agreed to support this vital, indigenous industry to the tune of about £2m. per year there were several threads to their rationale. None of these has really changed.

Firstly the cost of producing milk in Guernsey is far higher than elsewhere. Why? Lots of reasons, but they basically come down to smaller farms, using far smaller fields, a presumption against 'zero-grazing' factory-style production, and a restriction in the breed of cow that farmers are allowed to employ. The Guernsey cow produces the finest milk in the world, bar none, but its yield and its production cost per litre don't begin to compare to a milk-making machine such as the Holstein-Friesian.

Add into that the higher cost of land and labour in Guernsey and one thing is quite clear. If we want to preserve the iconic Guernsey cattle and our patchwork of ancient fields then someone has to pay. The only realistic options are the consumer or the taxpayer. Or a blend of both.

When the States first introduced 'contract payments' to farmers in return for the introduction of quotas and the imposition of environmental and welfare requirements it was a deliberate decision to shift some of the burden from the milk consumer to the taxpayer. There were two reasons for that judgement.

Firstly, the whole island benefits from the preservation of our unique and dwindling countryside, no matter how little milk they drink. Without a viable dairy industry we can kiss that countryside goodbye, so it seems only fair for everybody in our community to contribute. And surely if the whole community has to pay towards preserving the appearance of the island and its iconic cow then it's better for that premium to relate to the ability of islanders to pay. The contract payments which come out of taxation achieve this. Stinging low-income families with two or three children every time they buy the most staple of foodstuffs definitely does not.

Secondly, the biggest risk to our farming industry/countryside (they can't be separated) came from the threat of milk imports. The higher the cost of local milk the more temptation there obviously was to bring in inferior but far cheaper milk from the European milk lake. So it was a huge side benefit that the introduction of contract payments allowed the retail price to be slashed. Not only did that deter imports, but it was even trumpeted by the States of the time as a contribution to their anti-poverty strategy.

Fast forward to today and what has changed?

Very little, except that the States' coffers are in a far worse condition and economies have to be found. I accept that, but am I the only one to think that Deputy Stewart and his colleagues have gone for the easiest possible of targets?

Guernsey farmers are decent folk to a point where they sometimes don't fight as fiercely as they should do in their own best interests. They were never likely to launch an angry media campaign to hang on to their contract payments in the way other interest groups would have done in similar circumstances. Indeed, they seemingly accepted the Commerce and Employment minister's promises of a brave new world. I hope that trust wasn't misplaced, but I can't help feeling that the 50% cut in taxpayer support was far too deep and utterly disproportionate compared to other States' economy measures.

The other thing that has changed is that C&E have just announced they have now produced a new, watertight law to prevent milk imports. If so, that obviously removes one of the biggest imperatives for a lower retail price of milk. Nobody in Guernsey will welcome very expensive milk, but it shouldn't lead to imports thanks to this new robust legislation.

That said, with the stakes so high I would have far preferred to see this new wonder law enacted and tested for a couple of years before allowing milk prices to skyrocket.

I think what we need to remember is that the recent news that milk prices are to jump in the new year is just the start of the pain.

The process of weaning farmers off taxpayer support still has quite a long way to go. The consequences of those cuts? Either much higher milk prices or less cash for farmers. Probably both. So Guernsey's hard-pressed pensioners, and others on low incomes, can expect their personal milk budget to go up steeply to allow C&E to meet its FTP target. Either that or they will have to cut their consumption, which is hardly a good outcome for anybody.

I suppose one of the unintended consequences of the department's spending cuts leading to very expensive milk is that it undermines the Public Services Department's strategy for dismissing the extra cost of waste disposal.

What do I mean? Every time the PSD minister, Deputy Scott Ogier, hikes our waste disposal bills yet further, how does he justify those rises? 'It really isn't that much. For the average household it's only the equivalent of a few litres of milk a week.'

Well, where the retail price of Guernsey milk is heading that statement will no longer be in the least bit reassuring.