An exciting wave of new dairy products and brand development is on the way as the UK industry plays catch up with the rest of the world, says Arla Foods’ chief executive Tim Smith.

Speaking at the Dairy UK conference before this week’s RABDF Dairy Event, Mr Smith said: “Some of you may be surprised that to know that I feel we should be facing the future with optimism and energy.”

Mr Smith said the UK industry was still lagging on a global scale – of the world’s top-20 dairy companies only two were British – but there had been a massive investment by processors in efficient new stainless steel, innovation, brand promotion and product development.

Other speakers, like Ritta Korpela of Finnish dairy firm Valio, said there were huge opportunities for health-enhancing dairy products that could help with a wide variety of medical conditions from obesity to osteoporosis.

But farmer delegates, while recognising the value of brands, were more downbeat and some doubted whether the extra returns from branded and new products would find their way into farmers’ pockets.

“He (Tim Smith) didn’t say anything that made me feel farmers are part of the equation,” said the NFU‘s dairy board chief Gwyn Jones. “I can only judge Tim Smith on the actions of his company and those are something I am concerned about.”

John Thompson of the Ulster Farmers Union said brands were just playing around at the edges of the problem. “There’s nothing that will use large volumes of milk like biofuels in the arable sector. I’m optimistic about other sectors, but not so much about dairying.”

NFU president Peter Kendall, who also spoke at the conference, said he was extremely worried about the milk sector. “I cannot stress how run down, fed up, disillusioned and resigned so many of my dairy farming members are at the moment.”

Richard Weaver, chairman of supply group Dairy Crest Direct, said: “Producers aren’t optimistic. They’ve faced exceptional costs this year and need to see those refunded in the price.”

David Wilkinson, a Dairy Farmers of Britain supplier, reckoned PLC processors would feed most of the benefits to their shareholders.

Mr Smith, however, said he did expect the firm’s most popular brands like Cravendale to deliver for those farmers who could stay the course.

Arthur Reeves, milk purchasing director at Dairy Crest, said establishing a brand to the point where there was extra money for farmers was time consuming and expensive. “It took us 20 years with Cathedral City.”

Mr Weaver said it was also vital that milk buyers showed that market-related contracts were working by paying more for milk now that commodity prices were strengthening.

“I think the next move in prices is more likely to be up than down,” said Mr Reeves. Billy Keane, finance director of Robert Wiseman Dairies, was less committal but acknowledged that cream prices has continued to strengthen.