Dairy farmers have been warned there is “no room for complacency” in the industry, despite the increase in milk prices.
Speaking at this week’s SAC Outlook Conference in Edinburgh, Douglas Bell, SAC senior agricultural policy consultant, pointed out the OECD had made some bullish predictions on milk prices against a backdrop of drought in Australia and growing demand for milk in China and South-East Asia.
'Significant challenges'
“However, for dairy farmers in Scotland it is not all rosy and there are still some significant challenges out there," he said.
"Increased feed cost, for example, is eroding a fair chunk of the extra milk price at the moment.”
There is still a vast difference between the efficiency of the top operators and those further down the ranking, he added.
'Dramatic changes'
Mr Bell said there had been “very, very dramatic changes in the industry” in the past ten years with a 30% reduction in dairy farmers in Scotland, leaving only around1400 dairy farmers north of the border.
“Overall the future looks pretty good with strong commodity prices and evidence of restructuring and the drive to be more efficient bearing fruit.
“Suppliers now have a closer relationship with farmers than they had in the past and dairy farmers are doing their bit by embracing sustainable systems but compliance with new environmental directives could increase production costs,” he added.
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