Milk production and consumption of milk and dairy products is on the rise according to Dairy UK's The White Paper 2012.
The report revealed that 99% of people regularly consumed milk and dairy products - up from 96% in 2010 - signalling continued growth in the liquid milk, cheese and fresh product markets.
It also revealed that annual capital expenditure by the UK's major dairy companies has reached £210m, which according to Dairy UK chairman Robert Wiseman, shows how UK dairy companies more than match their EU counterparts when it comes to investment and innovation.
He said: "All the evidence suggests that we are preparing for the future in the right way. We are investing in competitiveness, through rationalisation and the attainment of scale right across the supply chain.
"The long-term prospects for the industry, driven by increasing demand and population grown, remain as good as ever, so it is hoped the imbalance between supply and demand is quickly resolved."
Jim Begg
"We are securing stronger international links, and our product profile is changing to allow us to exploit the opportunities which increasingly the free market will provide for us.
"We anticipate new trading relationships emerging from developments, such as the EU Dairy Package, and we are working as an industry to see how these can be implemented in our best interests."
The organisation's director general Jim Begg added: "Global oversupply led by strong southern hemisphere production has resulted in the inevitable cyclical reduction in commodity prices. And having reached an all time high, producer prices have recently fallen back, reflecting the decline in the commodity market.
"The long-term prospects for the industry, driven by increasing demand and population grown, remain as good as ever, so it is hoped the imbalance between supply and demand is quickly resolved."
He said there had been a marked increase in competitiveness resulting in rationalisation in the sector, as seen with Muller's take-over of Robert Wiseman Dairies and the proposed merger between Arla and Milk Link.
And commenting on the impact of quota abolition, he said: "As we go forward, we need to focus on our ability to produce enough milk to meet demand - the supply must go forward at the same rate as demand."