9 November 2001

DIFsays added milk value way to profits

ADDING value to milk is the key to securing a profitable future for both dairy processors and farmers, says the Dairy Industry Federations president, John Houliston.

He told industry leaders at the DIFs annual lunch in London this week that the UK dairy industry had the potential to be the best in Europe. It had an ideal climate for producing milk – and efficient dairy farmers.

"We also have a processing sector with technically advanced capacity and a highly developed distribution infrastructure for fresh dairy products. In addition, the industry is beginning to make progress in developing innovative products with added value as the key driver."

He outlined three areas the industry needed to address if it were to progress.

The processing sector must continue the "painful process of consolidation" and restructuring so that over-capacity was shed. "While there is excess capacity, we will remain price takers and not price givers," said Mr Houliston.

On developing higher margins and profits, he said a concerted effort must be made to build sustainable brands and redirect raw milk to higher value markets.

Too much milk was used in low-value products that were subject to currency fluctuations. It was not surprising that producers and processors operating in this area were price takers and not givers, he said.

But with only about 30% of UK milk being used in added value products, including doorstep deliveries, this market was ripe for growth.

Mr Houliston reinforced the DIFs support for radical reform of the CAP and the abolition of milk quotas. But the government needed to abolish support prices over a realistic time-frame and compensate producers.

But he stressed that any reform must not put the UK at a disadvantage compared with other EU states. &#42