By FWi staff

DAIRY farmers could have to cut milk production costs by as much as 15% to make a profit under reforms to the Common Agricultural Policy (CAP) agreed last week.

A cost-cutting solution from the Milk Development Council next week will reveal how farmers can maintain profit levels by trimming production costs by 3ppl.

The organisation hopes its Research-into-Practice bulletin will help dairy farmers cope with the CAP reforms agreed by European agriculture ministers in Brussels.

The booklet will clarify the main points of the package and present cost reduction strategies under three main headings.

Under the reforms agreed last week British producers will experience a 15% cut in butter and skimmed milk powder intervention prices over three equal steps.

The booklet will suggest that farmers restructure their businesses for low overheads, maximise the efficient use of inputs and minimise the causes of production losses.

Dairy producers look set to be the hardest hit under the CAP reforms which look likely to cut intervention support to the sector by 15%.

Compensation for the price cuts will be paid according to farmerís quota holding at the end of each milk year.

Milk quota will increase by 1.5% starting in 2003 in three steps, although the government has the option to confiscate quota which is less than 70% used.