Dairy farmers are asking for government support after demand for milk from cafes and restaurants plummeted when the UK went into lockdown.
Processors are not picking up the milk due to a drop in demand from the food services sector and some dairy farmers have been pouring it away following the COVID-19 outbreak.
The Royal Association of British Dairy Farmers (RABDF) wants the government to help fund a short-term financial support scheme to help dairy farmers who have been severely affected by the pandemic.
The aim of the scheme would be to ensure dairy farmers stay in business through the current crisis so they are able to begin resupplying restaurants, hotels and cafes when they reopen once the lockdown ends.
The association says a failure to back dairy farmers could disrupt the market and lead to a lack of supply later in the year.
Under the scheme, farmers would be reimbursed for the reduced value of their milk or if they are having to dispose of it because their processor relies heavily on the food service sector.
It is estimated around 300 dairy farmers, who produce around one million litres of milk a day, could benefit from the proposed scheme.
They would be reimbursed directly by the government up to their standard milk price under the scheme.
The scheme, which the association wants to be up and running by the end of April, would apply to those who supply a processor who can show their market has been affected solely from the impact of COVID-19.
Peter Alvis, chairman of RABDF, said: “This scheme will ensure both short-term and longer-term food security and ease the stress on the industry.
“Removing the excess distressed milk from the market place will help to stabilise the current spot price without causing long-term market distortion.
“It will also allow those affected dairy farmers to continue to pay for invoices for farm inputs to the wider local/rural supply industry beyond the farm gate and will prevent extra cows being culled which will exacerbate the problems in the beef supply chain.”
National Farmers’ Union dairy board chairman Michael Oakes said: “The dairy industry is just one of the many sectors affected by the impacts of Covid-19.
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“We have seen the almost complete loss of the food service market and closure of restaurants and cafes during the lockdown which has left some processors with little or no business.
“This has led to some farmers feeling like they have no option but to dispose of milk on farm.”
He said the NFU was working urgently with ministers and the supply chain on solutions that could include diverting milk into the retail sector and developing measures to support farmers affected by the crisis.