Dairy farmers signal growing confidence in UK milk sector

- Last updated on GMT

Related tags: Milk, Dairy farming, Dairy, Uk dairy farmers, Mdc

The Milk Development Council (MDC), the government-appointed
marketing body for the milk industry, claims that confidence among
British dairy farmers is on the increase, following months of
unrest and speculation over the stability of UK milk prices. Tom
Armitage reports.

According to the report, 23 per cent of UK dairy farmers interviewed by the MDC in April this year claimed that they were preparing to exit the UK milk sector. Now this figure has nearly halved to 13 per cent, of which the majority are smaller milk processors who produce less than 250, 000 litres per year.

It appears, however, that the larger milk processors - those who produce more than 1.25 million litres per year - still remain optimistic, with 5 per cent more farmers planning to expand their production than back in April.

Ken Boyns of the MDC Datum department, which provides market information and economics for the industry, commented: "The net effect of this change is that predicted production volumes in two years' time will not be as low as previously thought - a drop of less than 4 per cent on current volumes as opposed to 9 per cent predicted in April."

"In addition, recent moves by the co-ops to purchase and work in partnership with processors may have led to increased optimism among producers,"​ he added.

Perhaps erring on the side of caution, Boyns conceded, however, that if milk prices over the winter season fell, then the stance of dairy processors could alter considerably.

The MDC survey also highlighted a changing attitude towards the Single Farm Payment Scheme (SFPS) - part of a raft of measures agreed following the reform of the €40 billion EU Common Agricultural Policy (CAP), which will come into effect in 2005.

Some 62 per cent of farmers stated they would use the payment to support them in dairy farming, compared to 75 per cent back in April - signalling not only a change in the attitude of dairy farmers but also suggesting that more farmers are willing to leave the dairy sector if the new scheme fails to live up to expectations.

"This will probably be significant for milk production and prices if farmers carry out their stated intention, and will probably make milk production lower for any given milk price,"​ commented Boyns.

The last few months have seen confidence in the UK milk sector undermined by rising production costs, as well as a number of highly publicised milk price skirmishes involving British multiples and major milk processors - namely Arla Foods, Robert Wiseman and Dairy Crest.

Related topics: Markets, Fresh Milk

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