Episode 2 Gareth Wyn Jones - Milk Man

Milk, we pour it on our cereals and stick it in our tea. In the UK we

consume over nine billion pints every year, but have we forgotten

where it comes from? I don't think people really know how much work

goes into getting milk onto the shelf. Along with the dairy farms

and cows that produce it, milk has shaped our countryside and the way

of life. The industry is just one piece of the jigsaw. Now they face a

crisis like never br. This is the worse period I have seen in my

working life. Over the past 15 years the number of dairy farmers in Wales

has halved. On average three farmers leave the industry every month. It's

an embarrassment on me, on myself that I can't make it pay. The

traditional family dairy farm is in serious trouble. There isn't a

future. Milk is a global commodity and dairy is big business at the

mercy of the world markets. Can Welsh farmers survive in this new

cut-throat world. There must be room for a small family farm. I'm Gareth

Wyn Jones, I'm a hill farmer and campaigner for the best of Welsh

food and farming. I want to explore the dairy industry from the inside,

from the cow to the consumer, and from the farm to the supermarket

shelf. I want to see what it takes to satisfy our thirst for milk and

find out if there is a future for the Welsh dairy farmer.

Last week, I found out how many people would be happy to pay more

for fresh milk, if they knew the money was going back to the farmer.

I'd pay 1. 50 for four pints if that ments that people weren't short

changed. I've also seen the crisis facing many Welsh dairy farmers, the

first link in the milk supply chain. At the end of the day, if milk price

isn't there you cannot do it. Now, I want to learn more about the rest of

that chain. The majority of people do buy milk in the supermarket. This

is a massive business. We are talking about billions of litres of

milk. So these are the big players. I want to really know what goes on.

What kind of clout have they got within the dairy industry? And what

kind of power do they have? We really need to find out the whole

story of milk from farm to supermarket shelf. We've approached

all the major retailers, asking for the chance to follow their milk

supply chain. While they've offered us a statement, most have been

reluctant to let me see how they source their milk. That's a real

surprise. I thought it would have been another one of the retailers.

That's a surprise, but a positive. It's just after 4am. We've only had

one supermarket giving us an open invitation to come and have a look.

The surprise is they are the biggest in the country, it's Tesco's. So

we're on our way to the farm now. We will have a chat with the farmer. As

everybody knows, I'm not the biggest fan of supermarkets. What's

important today is that we find out how farmers are treated. Tesco have

invited me to a farm in Monmouthshire to meet Clive

Pritchard. I can give you a hand, if you want. Come on then. I've done a

bit of milking you know! You have. Well then. He's around one of 700

dairy farmers from across the UK who provide Tesco with milk. As a member

of the TSDG, Tesco sustainable dairy group. When it was initiated back in

2007, one of the ways that they were going to give us a fair price was to

get the cost of production and then top it up with an amount of money to

invest into the business. What kind of price are you on every litre? At

the moment, rough by 28 p. You're getting a good price really. A very

good price, it covers all my costs. It gives me a little bit extra to

invest into the business. Without this contract, I wouldn't be where I

am today. While other farmers have hit hard times with the changing

price of milk, Clive's contract has remained much more stable. The

beauty of the TSBG, we're not on a roller coaster, we're on a level

playing field which we can actually work with. You've got to be quite

lucky as well, to be in your situation, to get these contracts as

well. We are extremely lucky. Everybody in this area who's on a

TSDG contract will know how lucky they are. Clive is protected from

plum weighs in the market -- fluctuations in the market price. He

believes that the future lies with working with the big retailers. We

do need the supermarkets. I feel it's better to be working with them

than against them. The fact is they sell the vast majority of the milk

in this country and if you can get a good understanding, where we get the

cost of production and an investment figure, we really can't complain

about that. That's being very fair. Do you think there's room for more

supermarkets to be doing what Tesco are doing with you? Yeah, yeah. The

ideal situation going forward for the British dairy industry would be

most dairy farmers or virtually every dairy farmer involved in a

dedicated supply contract, which will keep this dairy industry going

in the UK for many, many years to come. While Clive works with Tesco

on his contract, there's a middle man in the form of milk processing

giant Muller. They are one of just a few companies that process and

bottle milk for most of the mainlior retailers. -- major retailers. How

many litres will you get rid of today? Approximately 3,500 litres go

off most days of the year. Over the year period, we can get up to 1. 3

million. It's a lot of milk. Yeah, yeah. A few pence will make a

difference to you. A few pence make a lot of difference to us, a big

difference actually. Milk from Clive's farm and others across Wales

is collected by Muller and transported over the Severn Bridge

and into England. That's where I'm going next. What we're seeing more

of, within the food industry is these food miles and the amount of

travelling everything does, the loss of the localness is quite

frightening. In the past, the milk we drank was very local. Dairy

farmers supplied a network of small regional creameries, who in turn

distributed milk locally. The hay dairy farmers of the doorstep

delivery are all but over with nine out of ten of us buying our

groceries in the supermarket, to feed our growing demand for fresh

milk, 24 hours a day, those small, independent companies have been

replaced by a couple of massive milk processors. The Muller plant is just

off the M 5 in Somerset. Here we are. A massive shed. Just a big

operation. Muller are part of a multinational company that has a

turnover of around five billion euros. Production manager Adrian is

guiding me through the process from milk tanker to bottle. This is the

raw milk silo room. There's ten large tanks here, each of them

holding 250,000 litres. You're saying these are large, these are

absolutely massive. Literally the size of the building. To get them

in, take the roof off and plonk them in. At any time we can stock pile 2.

5 million litres of milk. That's a lot of cows to milk to fill these!

It's just absolutely unbelievable the amount of volume you guys are

holding here. How long will that keep you, say if you couldn't get a

tanker through the gate for a day-and-a-half? A day-and-a-half.

That's it? 1. 8 million litres a day. Wow! The whole system here is

automated, a computer programme controls the process with the

operation working around-the-clock. That's really noisy. These are the

three pasteurisers. We have two at 40,000 litres an hour, one at 20,000

litres an hour. They're running for 20 hours a day. Wow. Every drop of

milk is traced through pasteurisation, hop odge nighsation

and finally bottling -- homogonisation. That's big. This is

absolutely unbelievable. There's a stop. It's not meant to.

My giddy... The sleeves are going on the bottles now. I can see them now.

How many bottles is this doing in a minute? 300. A minute? Yeah. We've

got five machines. Yeah, that just gives you the sense of proportion.

This plant runs nearly around-the-clock. You can see how

much milk is passing here in a few minutes. This is what it takes to

supply the major supermarkets. This is what they need to keep milk on

their shelves. I might have been milking some of this stuff, but to

be in this bottle now is unbelievable. I can't believe the

size and the scale and just how mute mated it is. -- automated it is.

Yes, this is what all the big dairies are running like now. This

is very alien to me, computers, machines, never-ending conveyor

belts and hardly any pelt around. -- people around. I am not very often

lost for words, but seriously lost for words with what I'm seeing right

here now. In less than two days, enough milk passes through this

factory to fill an Olympic-sized swimming pool. Considering how

smoothly this system runs, it's a shame that some of the farmers

keeping this going are having such a rough ride. Is there more than one

of these in Great Britain? We've got ten factories strategically placed

throughout the country, close to major road networks. We're right

next to the M 5 here. This is the way forward really for the dairy

processing industry. This is what it's going to look like in the next

10, 15 years. All high volume dairies will have to be this size to

get the through put through otherwise they won't be able to get

that scale of profit. After being bottled, the milk is scored in a

giant fridge -- stored in a giant fridge waiting to go onto lorries. I

never thought I'd say this, but this is a sea of milk bottles. It's only

halfway through the day today. They've got another however many

hours to produce today. It's quite a quick turn around from farm into

store really. It's probably no more than 48 hours from being milked to

being in the bottle here ready to be in the supermarket. It's a hell of a

conveyor belt. It is, yeah. Do the supermarkets expect that as well?

Yeah, they don't accept it two less than so many days' shelf life on.

Almost a million bottles of milk leave this processing plant every

day, with milk returning to Wales and supermarket shelves from Cardiff

to Caernarfon. These guys are slick. They're clever. They're fit for

purpose. But as a farmer, and as somebody that's close to the land,

that is so far removed from what farming is. That is a different

world to what I'd ever imagine any dairy would be. The truth is, we've

all been suckered into it. We've all been drawn into that cheap food.

This is why they're growing, this is why they're getting bigger. It's

doing a job for the consumer, doing a job for the supermarket. But it

just really takes the heart out of the true worker in this industry and

that is the farmer. He's not getting a fair price. These guys will never

go short of millions. Having seen the scale of the Muller processing

plant, I'm still struggling to see what the future holds for the

smaller dairy farms. If they're not among the lucky few to have a

supermarket contract, how can they survive in an industry that's

becoming increasingly competitive? I need some answers. I'm meeting the

former chief economist with the National Farmers' Union, Dr Sean

Ricard. There isn't a future for every dairy farmer. Over the last 60

years we have seen the number of dairy farmers decline. As some go

out of business, it creates opportunities for others to expand

and become more efficient. If this industry is going to continue to

make a real contribution to the British economy, to the quality of

life in the countryside, farmers have to get out of bed and strive

every day to do what they do cheaper than they did the day before. They

just have to keep that mind set going. For some farmers, that tends

to be getting larger. There are economies of scale in dairy farming

and therefore if you have a larger herd you tend to be able to prodouse

at a cheaper price. Is factory farms the way forward for you then? I

don't like the expression factory farms. Let's call it what it is,

industrialisation. It means efficiency. Industrialisation means

productivity and cheaper food. The reason our standard of living is

better than our fathers and the fathers before them is because of

industrialisation. Why does anyone imagine one of our biggest

manufacturing industries for the production of food can stand aside

from it? Of course we have to take the benefits of science and

technology and management into farming to benefit both the farmer,

to benefit the country and to benefit the consumer. That's Sean's

position clear. Efficiency is key. That means bigger farms and more

cows. To keep the continuous flow of milk on our supermarket shelves, the

average size of a dairy herd in Wales is increasing. The family

farms of around 70 to 100 cows that form the fabric of Welsh rural

communities are now being replaced by farms with 500 to 1,000 dairy

cows. It's happening all over the world - in America, the Middle East

and China. There are dairy farms with herds of tens of thousands of

cows. Welsh farmer Fraser Jones from Welshpool is determined to follow

the trend. Morning. How are you doing? Very good. I've been Ayvazov

few places but I don't think I've ever seen such a big shed They are

quite big. This is where the fodder will be stored for the thousand cows

we intend to milk here. 1,000? Yeah, that's just one farm. Not only do

you have these three massive sheds, there's something in development

there. That's going to be the milking parlour, using the latest

technology, the most efficient way of harvesting milk. That will enable

me to milk 450 to 600 cows an hour. The investment that Fraser has put

into his farm is matched by his ambition. It's a massive scale of

farming. You know, this is really industrial farming. It's not playing

about. You weren't long feeding tons in there. The machine is on top of

the job. That would take me a week with my little fork! This shed holds

320 cows. My long-term goal is I want to milk up to 2,000 cows, is

what I'm aiming for. You are going to expand to a massive amount of

cows. You will be one of the biggest in Wales then. We'd be up there.

Look around the world. I've been to America and throughout Europe

looking at farms and what other countries are doing, and if we want

to still produce milk in this country, we have to be able to

compete with those guys. To manage such a huge herd, Fraser now employs

six members of staff with more to come. But he still likes to keep

hands on with his cows. How's it looking? Yeah, it's all coming the

right way. No problems. Just giving her a bit of a massive. Just open

things up. Couple more pushes girly. It's a buzz, isn't it, doesn't

matter how many times you do it. Very close. Yeah, very close. Head's

out. Do you want to grab a leg. Yeah, of course I do. She's nearly

here. Together. She's come round and lick it now. Good girl. Nature will

take its course now. Yeah, it will. She's having a smell.

It's hard not to be impressed by Fraser's operation. He knows his

cows as well as any farmer. Buff he's also a shrewd businessman and

this farm is very much abusiness. -- very much a business. This is the

biggest dairy farm I've seen and most probably one of the biggest in

Wales. I can see this as the future for Fraser. But you know, the

majority of people couldn't afford the way he's moved forward. Not many

places in Wales, not the smaller family farm can do what he's done

here. There's no doubt Fraser's taken a huge leap of faith, but he's

not the first Welsh farmer to take this ambitious course of action. In

Pembrokeshire, I've come to visit one of the most hi-tech and biggest

dairy operations around. This is milking in the 21st century. Maybe,

this is the only way to be efficient and sustainable. Massive herds,

massive volumes, and colossal investment. Over the past couple of

years, this herd has been increased and they've installed a brand new

milking parlour. This is impressive. Well, yes, it's the way to milk a

lot of cows. This hasn't come cheap has it? No. A rotary parlour must

have cost hundreds of thousands. Yes, it's a big investment. It's

state-of-the-art. Well, yes, in a way. The times have moved on. To

secure a future on the land for his children, he decided to borrow just

under ?2 million to modernise the family farm. The future looked

bright when he took that decision, but the price he's getting per litre

has slumped and there's a risk he could lose everything. Two years

ago, milk price was 30 p, it wasn't so bad. What are you getting today?

Last month 20 p, in May 17. 8. God, that's a massive difference. It is,

yeah. No reward at the moment. Just seem to be sinking money into the

farm. It's not coming back. Prices fell so much that he's been unable

to repay his borrowing and has been making a loss every day. You must be

so disheartened after spending that kind of money and getting so little

for your produce. Where's the answer? Where's the way out for you

as a family to make sure there's a future here? Three months

down-the-line is going to be banks are going to be wanting their money

back. Yeah. Short-term, things have got to change pretty quick. We're

talking months. Yes, we are. If it doesn't improve in months, there's a

possibility that the banks might come knocking on the door? Yes,

yeah. Your morale goes down as well. There's nothing worse than being in

debt and the phone ringing and you don't know who's there. You don't

want to answer it because you don't want to hear the other person on the

other side. If things don't get better, that's it really. We can't

carry on with milk price under 20 p here, can't. Rather than passing on

a thriving business to his children, he's now faced with passing on a

huge financial burden. We have to do something to give a future to the

youngsters, because we don't want to lose all the young people from rural

Wales. We always hoped that things are going to improve. You've got to

think positive. You worry if it doesn't improve, you know, what's

going to happen? Like many of the farming families I've met, the

Thomases feel the supermarkets are the root cause of the crisis, by

devaluing milk and using it as a way to get people into the stores. The

supermarkets need to stop using it as a loss leader. We need a better

price for it. There should be a standard price for it for the public

to purchase it so that there's no price wars. Supermarkets, at the

moment, they really have got the power of how much they want to sell

it for, how much they're giving back to us. Despite what the experts say

about efficient systems, this family are proof that no matter how big or

efficient farms become, if milk isn't sold to us at a fair price, we

can't expect them to survive. Family farms, big, small, however you want

to look at it, they're businesses and they've got to make money.

Pennies for these guys per litre make a difference between profit and

loss. The devaluing of milk, that needs to be addressed. We really

need to look at that. I'm on my way to Tesco to see how all that milk

ends up on their shelves. And to ask some questions. I don't want to jump

to conclusions, but I am slightly sceptical of supermarkets, as you

know. Sometimes you've got to give the devil his due, bite the bullet.

It's always good to talk and as they say, every little helps. I've seen

that Tesco are dealing in vast quaunts of milk and that --

quantities of milk and that they are giving the farmers in their

sustainable dairy group a fair price. But I still think they're

selling milk too cheaply. I've come to meet the dairy sourcing manager.

As a farmer myself, I feel that supermarkets have played a big part

in devaluing milk over the years. Bringing the price down and it has

been a price war to bring people through the door. I don't think it's

worked because you know, this is a fantastic product, when milk can be

cheaper than water, there's something wrong. I think we all can

do more to be promoting a fantastic product like milk. Where do you

stand with that? To be honest, I disagree around the devaluing. What

we focus on is how to add value to it. That's what the fair for farmers

guarantee is about. Every time a customer picks this up, they can see

that actually by buying through Tesco they're directly supporting a

farmer. They can see what our farmers are doing. Speaking to a lot

of dairy farmers, they've had a tough time. They've struggled.

People are out there who aren't going to survive in the next couple

of months. This is how bad the love of it is. They still think milk is

too cheap. It's a weekly staple. It's important for our customers and

for their families that they can afford to buy the milk. It's

critical that we get that out. The feed back I've had is that these

people are willing to pay that extra few pence as long as they know it's

going back to the farmer. That's the important message maybe that

supermarkets, all supermarkets should be taking on board. That's a

really important thing that we're doing, every time you buy our milk

that money is going back to the farmer. It doesn't matter if you buy

one particular product, every product that we're selling that's

fresh milk, the money is going back to the 700 farmers. For me that's

something that we're really proud about. The way forward maybe for the

dairy industry to be sustainable is these kinds of blueprints? I think

so. With the industry at the moment, and going forward, that cost

production mechanic with a profit on top is the most sustainable way for

those dairies to, not just survive, but thrive. Fair play to Tesco's. I

hate to say it, I think they are giving their farmers a fair price.

But we've got to remember that's a very small minority getting treated

like this. There's many more dairy farmers that aren't getting very

good contracts. The majority of dairy farmers are struggling. And I

wonder if there is another way for them to work within the industry.

Next time, I explore different ways of selling milk. We've taken the

milk and turned it into something that anybody can enjoy. I see how

some dairy farmers are getting more from their milk. Selling product

with a story is the right way to go, not just for us, but all farmers

that have the capacity to do that. And how others are taking back

control of the milk supply chain. It's the only way I can see forward.

For my children as well. when farmers leave

their daily routines behind... Right, here we come, Dorset!

..for a show day.