26 February 1999

Be prepared for dairy rationalisation

THERE is still some way to go before UK dairy producers are competing efficiently against the rest of the world.

Independent dairy consultant John Sumner urged producers at the conference to prepare for more rationalisation before the UK industry could compete with increasing competition for milk from overseas competitors. "There are 30,000 producers selling 14bn litres of milk in the UK. In three to four years I believe 50% of that milk will be coming from 7000 units each with 150 or more cows," said Dr Sumner.

He urged the industry to think long and hard about the UKs strengths; herd size and locality to milk buyer are the envy of many competitors. "We must prepare for more intensification and expect to see cows housed for longer periods.

"It makes great sense to take hold of advances in cow genetics and produce more milk from fewer animals. Although the current trend is to produce milk on low cost grazing systems I do not hold out much hope for its future. High input systems are the future, but need not necessarily mean high costs."

Controlling fixed costs was singled out as a step towards greater competitiveness. More action had to be taken to cut unnecessary labour and machinery costs, he said.

Dr Sumner also expects rationalisation in how milk is sold away from 40 supply groups down to just three farmer co-ops feeding eight big buyers. "One of these co-ops could be Milk Marque and it may enter into processing."

His conviction that quotas demise in 2006 will open up competition won strong backing from delegates in a show of hands. With milk prices averaging 19p/litre, Dr Sumner suggested quota was supporting prices by 2.5p/litre. While phasing out quota will benefit some, it puts a finite life on its sale: "Those quota-holders with no one to take over businesses must give consideration to realising what is still a valuable asset," he added.

DAIRY INTEGRATION

&#8226 Units will have over 150 cows.

&#8226 Size and location are strengths.

&#8226 Growth in high inputs systems.