Milk production might never again hit quota, according to dairy consultant Nick Holt-Martyn of the Dairy Group.

Cow numbers were falling and advances in genetics and cow management could not fully compensate for the decline, he claimed.

At current rates based on DEFRA census figures, the number of dairy cows in the UK would probably fall below the 2m mark in 2007, he said.

Milk yields would continue to grow at 2.6% a year, but not fast enough to offset the fall in numbers, he said. They should hit an average 6946 litres in the 2007/08 milk year, he said.

Mr Holt-Martyn blamed low milk prices for the trend.

“There is a squeeze on margins at farm level, and while the economics of dairying remain difficult, farmers will continue to vote with their feet and leave the industry.”

He predicted that production would drift down and stabilise at around 13.7bn litres a year, compared to highs in the 2003/04 milk year, when it exceeded 14m litres.

But far from being bad news, Mr Holt-Martyn said lower production levels would benefit farmers by removing quota from the market mechanism.

“Whereas in the past quota was a cost, it shouldn’t be so in the future. We can now talk about the mechanics of milk production without the artificiality of the quota system.”