A special report by the European Court of Auditors has raised further concerns over the impact milk quota abolition will have on Welsh and UK dairy farms, says the Farmers’ Union of Wales (FUW).

Speaking at the Welsh Dairy Show in Carmarthen, FUW milk committee chairman Eifion Huws said: “This is now the fourth report to be published in recent years that highlights the price volatility and fall in farm incomes that will accompany the abandonment of the milk quota regime.

“The FUW has received criticism from some regarding its long-standing policy on milk quotas, yet the evidence is now overwhelming - abandoning milk quotas will be a bad thing for the dairy industry, and that is something we cannot support.”

The Court of Auditors considered how effectively the Commission manages the market for milk and milk products with reference to the main objectives of EU dairy policy.

Those objectives include achieving equilibrium on the milk market, stabilising prices, and ensuring a fair standard of living for producers.

The Court found that the nominal milk producer price varied little during the 1984-2006 period compared with the period before the introduction of quotas. However, in real terms, the milk producer price has fallen continuously since 1984.

The report goes on to draw attention to the overall effects expected following the withdrawal of quotas.

These include “an increase in milk production, which should lower the market price”, “a reduction of producers' incomes, in spite of an increase in the quantities produced”, and “a stimulation of the EU's exports, possibly causing a downturn in world prices”.

The report also highlights the fact that farmgate and consumer prices do not follow parallel trends, stating: “Between the beginning of 2000 and mid-2007 nominal consumer prices for milk products increased by 17 % while the nominal price paid to the producer fell by 6%”.

It goes on to say that “on a market liberalised by the abolition of quotas, production capacities will remain relatively inflexible and producers might not be in a position to adapt rapidly to fluctuations in demand.

"The Council has decided to retain public intervention as a 'safety net'. But this safety net is so thin there is a risk it will be of only limited use in a major crisis and quite inadequate in relation to the risks in respect of the surpluses that the EU might face.

“The Commission and the Member States must ensure that the concentration of processing and distribution companies does not reduce milk producers to mere price-takers and does not restrict the final consumer’s possibility of enjoying an equitable share of price reductions.”

Mr Huws added: “Once again, the FUW’s long standing position on milk quotas has been completely vindicated. This represents yet more evidence confirming that the abandonment of the quota regime will significantly add to the problems already being felt by the industry.”

The overwhelming impact of bTB restrictions on the day-to-day running of a farm was today brought home during a farm visit in Carmarthenshire arranged by the Farmers’ Union of Wales.

First hand evidence of the impact of bTB restrictions was outlined during the visit to Penlan Argoed farm, Penlan Road, Carmarthen, run by FUW members Roger and Alison Evans and family.

Mr and Mrs Evans run a herd of 350 dairy cows and have been dealing with the challenges of bTB restrictions since April 2008. Due to the restrictions all unwanted dairy bull calves have had to be put down and beef calves, normally sold at two to three weeks, have to be reared on the farm.

Mr Evans said: “The130-head beef unit now involves a lot of extra work and puts pressure on farm buildings, especially over the winter months. We also had to change our grazing system in order to cope with the high stocking rate that has been forced upon us.

“The cows in milk are split into two groups - early lactation and late lactation. Due to three successive wet summers and as our stocking rate is currently at 3.3 LSU/ha we decided that the early lactation group would have to remain indoors until they are confirmed well in calf at about 140 days.

“This move was taken to reduce the pressure on the grazing land and to allow better quality pasture for the late lactation cows, especially as a lot of the farm is sloping and prone to poaching when wet.”

Due to the high stocking level, growing enough forage became a problem for the family farm. Feeding rationing on the farm is currently based on a semi-total mixed ration (TMR) system with flat rate concentrates being fed in the parlour.

“bTB restrictions have brought many challenges our way and we’ve had to work hard in order to resolve these problems.

“For example a lack of forage has meant that we had to extend the forage part of the ration by feeding brewers grains and sugar beet pressed pulp in the TMR. We also have to buy in additional silage as is needed, either as a standing crop or as silage from a clamp.”

In the past the family has invested heavily in order to increase their output which was already relatively high as their cows are producing on average 8,000 litres per annum.

“It was a case of grow or fold,” said Mr Evans.

The farm now boasts a 30/60 swing over herringbone parlour with a 22,000 litre milk tank and has a cubicle building for 155 cows. But even with the constraints of bTB restrictions Mr and Mrs Evans are looking to the future with an additional building of 50 cubicles and a feed passage for the fresh calver group planned for this winter.

“Our first priority at the moment is to be clear of bTB as early as possible so that we can sell all the beef cattle and increase the dairy herd to 400 cows in order to reach our goal of producing 3.5 million litres of milk per annum,” added Mr Evans.

“In the past we have bought in cattle from local herds and marts but our long term aim is to breed all our own replacements thus operating a totally closed herd in order to minimise disease challenges.”

The family also has plans to replace the older section of the dairy housing with a new more spacious and comfortable building to benefit the higher yielding cow.

Succession is important to Mr and Mrs Evans and they are keen to delegate more responsibilities to the younger generation in the family. “We are lucky our children are keen to farm, and we are keen to see them carry on with our farming tradition,” said Mr Evans.

The family are quite aware that more challenges lie ahead especially in terms of tackling tighter environmental restrictions in light of the effects of climate change. “There is no doubt that challenging times lie ahead of the industry.

“Climate change will undoubtedly bring about stricter environmental controls especially in respect to slurry and farm waste. And farming after 2013, with a reduced or no Single Farm Payment, will also be an obstacle that we’ll have to meet head on,” said Mr Evans.

Speaking after the farm visit, FUW’s dairy committee chairman Eifion Huws said: “The Evans family has a well run farm in Penlan Argoed and they are an example to us all. They have proved that, whatever obstacle is thrown in their way, where there's a will there's a way!”

A Carmarthenshire farmer was today rewarded for his diligent lifelong service to the Welsh dairy industry.

Bryan Thomas was presented with the Farmers’ Union of Wales-HSBC Bank plc award for outstanding service to the Welsh dairy industry during today’s Welsh Dairy Show at Carmarthen.

United Counties Agricultural and Hunters Society chairman and a member of the judging panel Lynn Davies said: "Bryan’s contribution to the dairy industry in Wales and the UK throughout his lifetime is second to none and I am delighted that he has won this highly prestigious award."

Mr Thomas of Gelli Onnen, Cwmffrwd, Carmarthen, has been a board member of the National Milk Records for 15 years and is currently the chairman of the Dairy Development Steering Committee. He also sits on the Assembly’s Dairy Strategy Group.

He is a past Council member of the Holstein Friesian Society and is a founder member of the Welsh Dairy Show.

At the 2005 Royal Welsh Show, he received a Fellowship from the Royal Agricultural Society for his services to agriculture.

But most people would associate Mr Thomas with the highly respected pedigree Holstein Gelliddu herd which he and his father established during the 1950s.

The Gelliddu herd has won many herd competitions and events within the South Wales British Friesian Society, Holstein South Wales Society and the National Milk Records.

Mr Thomas now farms with his son Gareth and the herd continues to be one of the leading pedigree Holstein herds in Carmarthenshire.

Bryan is a well known prestigious judge at many national events. He also has strong links with the Carmarthenshire Federation of Young Farmers Clubs due to his contribution to St Peter’s YFC.

He is the first person to receive two prestigious awards within the county as, in 2006, he won the FUW/Sioe Sir Gâr award for outstanding services to agriculture in Carmarthenshire.

The Farmers’ Union of Wales today warned that Defra’s “Vision for the Common Agricultural Policy (CAP)” would decimate Wales’s rural communities.

The stark warning follows publication of a joint report - by Queen’s University, Belfast; the Northern Ireland Agri-Food and Biosciences Institute (AFBI); and the Food and Agricultural Policy Research Institute (FAPRI) of University of Missouri - on the impact of changes to the European CAP proposed by Defra and the UK Treasury in 2005.

The work confirms the union’s worst fears and predicts massive falls in livestock numbers and commodity prices.

FUW president Gareth Vaughan said: “The FUW has raised our concerns regarding the impact of Defra’s proposals with Ministers, politicians, and civil servants, at every opportunity since 2005, and this work now confirms exactly what we have been saying.

“The proposals, if allowed to go ahead, will rip the heart and soul out of Wales’s rural communities and completely destroy what little food security we retain.

“The fall in livestock numbers would have serious consequences for Wales’s environment, while the drop in income for farms and food businesses would close down many businesses and cost thousands their jobs.”

The report predicts that Defra’s plans would result in a 191 per cent increase in beef imports, leading to a 29% fall in Welsh suckler cow numbers, whilst Welsh beef production could drop by 11%. Welsh ewe numbers are also set to decrease by 19%, and a 16% decline in finished lamb production is estimated.

Declining livestock numbers is also coupled with a decline in livestock prices. Hardest hit will be beef producers, with a staggering estimated drop in beef prices of 25%.

Last week the FUW, in evidence to the Welsh Assembly’s rural development sub committee, labelled Defra’s document as “a vision for the destruction of UK agriculture”.

During last week’s Labour Party conference, Defra Minister Hilary Benn emphasised the UK Government’s concerns regarding food security.

He said: “Our farmers and farmers around the world will have another two to three billion mouths to feed in two generation’s time.

“Our farmers - at the heart of our rural communities - are ready for the challenge. And we should support them in the great job they do.”

Responding to Mr Benn’s comments, Mr Vaughan said: “If this is really the case, then the government must stand by their words and dissociate itself from the 2005 vision document and policies that would completely undermine Europe’s food security and be apocalyptic for our rural communities.”