The government has launched a consultation on its proposals to change the structure of bodies funded by statutory levies, like the Milk Development Council (MDC).
Brian Peacock, MDC chairman, has already criticized plans to create a central collection agency for payments, saying "costs borne by dairy farmers could only increase".
He told www.DairyReporter.com that only 0.6p out of every £1 the MDC collects goes towards collection administration. He said the MDC was already more efficient than other levy bodies, with the British Potato Council charging as much as 6.9p per £1.
Peacock also said that dairy industry links would be weakened by plans to absorb the MDC's economic data research and Dairy Council nutritional research.
This would "force less-focused rather than sector-specific working. However, it is this sector-specific work that is proving so successful at the moment in improving raw milk contracts and defending dairy products in the eyes of consumers".
The MDC, which raises around £7m per year from a statutory levy on producers, spends around half of this money on market development strategies, designed to encourage dairy consumption.
Peacock said recent successes from targeted marketing included rising sales of Cheshire cheese and increasing milk consumption.
He fears projects may have to be dropped if the government plans to change the levy system raise the MDC's costs.
"We can also do the basic research work behind the launch of new products," he said, adding that many dairy firms in Britain were especially keen to communicate the nutritional benefits of dairy products to consumers.
The government's proposals, put forward by the Department for the Environment, Food and Rural Affairs (DEFRA), did at least support the continuation of statutory levies.
Peacock said this was the right move for UK dairy in the short-term.
Over the long-term, he said statutory levies may be replaced by voluntary or contract levies as producers and dairy firms began to work more closely together. But, "this would be some time into the future", he added.
The MDC is consulting its regional committees on the new levy proposals. DEFRA has asked for feedback by early February 2006 and is expected to make a decision by late spring.