DairyCo

Dairy farmers staying positive but it’s a delicate balance

Published 2 May 08

Dairy farmers staying positive but it's a delicate balance

There is a marked positive change in the mood of British dairy farmers according to DairyCo's latest Farmer Intentions Survey.

DairyCo, the organisation which replaced the Milk Development Council, has carried out the survey to give a snapshot of farmers' future plans and the results show encouraging levels of positivity but also highlight the extremely fragile situation farmers are facing.

In response to the recent rises in milk prices, 37% of farmers are intending to increase milk production this year compared to 20% in 2007, and the number of farmers intending to leave the sector in the next two years has fallen from 17% to 7%. 

Any increases in milk production, however, will not be enough to stem the decline in overall milk production because the number of farmers leaving the industry outweighs the planned expansions.  In Great Britain, milk production is forecast to fall a further 0.6% in the next two years with predicted production for 2009/10 estimated to be
11.1 billion litres with UK production predicted to be 13 billion litres.

Price, as expected, is still key to ensuring farmers carry out their initial stated intentions for expansion. 

Huw Thomas, head of supply chain information at DairyCo says: "We presented several hypothetical scenarios around potential increases and decreases in the milk price and asked farmers what they would do.

"Any suggestion of a fall in milk price produced some strong reactions with a four-fold increase in those intending to leave the dairy industry if the price dropped by 2ppl, reducing total production by twenty eight per cent from its level in 2007/8."

With many different opinions on how the industry will fare in the future, this survey has proved a reliable indicator in the past.  When the Milk Development Council ran the same survey in 2006 it was predicted that 14% of dairy farmers - equivalent to 2,844 - would leave the industry within the following two years.  The actual number of leavers, according to Defra census figures, was 2,467.

Other areas of this year's survey looked at the levels of investment on-farm expected over the next five years with 50% of dairy farmers intending to invest less than £25,000 and just one in ten intending to invest more than £100,000.

The upcoming NVZ regulations were also addressed, with 40% of farmers believing they will be affected - although there was an equal split between those who were planning to invest to comply and those who had not yet decided what to do.

Mr Thomas says: "With farmers' costs increasing on an almost daily basis this snapshot of industry intentions emphasises the fragility of British milk supply - on a positive note recent signals from the processing sector indicates it is aware of the current situation and is working to transfer increased costs through the supply chain in order to maintain British milk production."

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For further information:
N:    Philippa Stagg
T:    01285 646519
E:    philippa.stagg@dairyco.org.uk

Notes for Editors:

DairyCo Limited was set up in April 2008 following a fundamental review of agricultural levy boards by Defra. The five existing levy boards (including the Milk Development Council) were replaced by one statutory levy board, the Agriculture and Horticulture Development Board (AHDB).

Reporting in to AHDB are six sector companies - DairyCo will cover the milk sector.

DairyCo is funded entirely by milk producers, via a statutory levy on all milk sold off-farm, at the rate of 0.06p per litre.  This provides an annual income of around £7m.

DairyCo's current focus is on improving the profitability of dairy farming by focusing on four specific areas:
•    The provision of a world-class information service
•    Helping dairy farmers meet and manage environment needs and regulatory requirements
•    Helping promote the positive perception of dairy products and dairy farming with the general public
•    The development of DairyCo towards a self-sustaining model.

DairyCo co-funds the industry's nutritional and issues management resource - The Dairy Council - with the processors' trade body Dairy UK.