A SHARP FALL in milk prices could affect the whole dairy industry as even more producers call it a day, according to the latest report on the effects of CAP reform for the Dairy Supply Chain Forum, which was launched in full this week.
Report author David Colman, from the University of Manchester, said the UK could fall 1bn litres below quota by 2007/08 if prices fell in line with the intervention milk price equivalent as the EU progressively cut intervention prices for butter and skimmed milk powder.
NFU dairy board chairman Gwyn Jones said: “The messages coming out of this very important piece of work are clear: If the dairy industry wants to avoid a severe and damaging long-term decline in milk supply, dairy farmers must receive remunerative milk prices.
“The NFU has consistently argued that producers will and must treat the new single farm payment as decoupled and base their production decisions on the potential for profit. If the profit isn’t there they will simply not produce,” he added.
Jim Begg, director general of Dairy UK, said: “This emphasises the importance of having as much stability as possible in dairy product markets, and the European Commission will have an important role to play.”
For the full text of the report go to: www.defra.gov.uk/foodrin/milk/colmanreportv2.pdf
This represents half the co-op’s earlier 0.5p/litre cut. Protests from members and the industry, who feared the action would undermine the market, persuaded Milk Link to reinstate the 0.25p/litre and to add it instead to members’ capital retention levy.