Reducing milk supplies is not the answer to dairy farmers’ problems, the Milk Development Council has claimed.

In its report, Routes to Profitability: Is reduced milk production the solution? the MDC said calls to cut the production could damage the industry.

The report, requested by NFU Scotland, follows comments from some PLC processing chiefs that there is too much milk on the market.

If this is the case, logic suggests reducing the amount of milk available would mean less exposure to commodity markets that pay the lowest price.

The market would then be governed by supply and demand, with buyers forced to pay more to secure suppliers.

Report author Ken Boyns, the MDC’s head of economics, admitted farm-gate prices are driven by the commodity market, which accounts for about 3bn litres of milk.

But he said removing this factor would not necessarily boost producers’ milk cheques and could increase price volatitlity.

Reducing milk production would also be “impossible to implement” without forcing up to 44% of dairy farmers out of business, he added.

“To reach this scenario only the most efficient or determined farmers would still be in business,” he said.

“Their costs of production would already be low, or they would be prepared to take low margins. Thus you could well find the milk price actually falls rather than rises.”

Mr Boyns said milk production could be returned to profitability by increasing efficiency, developing more constructive relationships across the supply chain, and using innovation to add value to milk. 

Dairy Farmers of Britain, the UK’s largest milk co-op, said it was looking for more milk not less, but it had to be milk of the right quality at the right time of the year. 

To see the full report go to www.mdc.org.uk