Milk production in Great Britain could fall by 900m litres – 7% – over the next two years as the number of producers intending to leave the industry rises to its highest for three years, according to a new report by the Milk Development Council.
In its fourth annual Farmer Intentions Survey, published on Tuesday (3 April), the MDC said a only fifth of producers plan to increase production – down from a quarter in last year’s survey – while 16% of producers – about 3000 – intend to quit the sector. This could lead to a 7% fall in national milk production by the end of the 2008/9 quota year, it says.
The MDC says uncertainty and lack of confidence were the main themes from the survey responses. As a result of falling profits caused by low milk prices and rising input costs many farmers are looking to invest in other enterprises, it adds.
“Many farmers realise that major changes will be necessary for businesses to remain sustainable in the long term. While some may have the drive for change, it’s becoming hard to finance such plans with margins being continually squeezed,” said Helen Eustace, MDC senior economist.
“This really highlights the impact low margins are having. Normally, the most efficient farmers would be expanding to replace the production lost from those leaving, but even these are considering their future.
• 12% of those farmers producing over 1.5m litres of milk annually are planning to leave; compared with 6% last year
• More than half the farmers surveyed stated they would not be able to meet associated costs of upcoming NVZ regulations, such as increased slurry storage, if the price tag was £20,000 or more; 40% said they wouldn’t be able to comply if it meant reducing stocking density by 30% or more
• The survey suggests that more than three quarters of farmers intend to invest less than £25,000 in total over the next five years, and only 3% are planning to invest more than £100,000 – down from 9% last year. The majority of farmers intend their main investment to be just general maintenance
For a full copy of the survey, go to www.mdc.org.uk and download a copy by following the link to Farmer Intentions Survey 2007. Alternatively, order a copy from the MDC publication line by calling 01285 646510.