New report raises prospect of milk imports as dairy shortages beckon

The UK could be facing a shortage of milk by November 2011, which raises the prospect of milk imports, a new report has projected.

Kite Consulting’s Milk Forecasts report has warned that the UK is heading for its largest ever under quota position.

“The exodus from the dairy industry is running at 7% and accelerating,” said the report’s co-author, dairy industry consultant John Allen. “In the next three years one in five dairy farmers will quit.”

Supply decline

At that rate of attrition just 12,300 dairy farmers will be left in the UK by 2012. And with annual demand at 12.6bn litres if the decline continues supply will be as low as 12.68bn by 2011. This means by November of that year, when the seasonal downturn of supply is at its lowest, the UK could see a real milk shortage.

“Less milk would be manufactured into cheese, butter or powder, drawing in imports to fill the shortfall and exposing us to world market prices and exchange rate fluctuations,” Mr Allen warned.

Sir Stuart Hampson, chairman of the John Lewis Partnership, which owns the retailer Waitrose, backed the viewpoint, telling the Daily Telegraph that he believed the UK could become a net importer of liquid milk in as little as five years’ time.

“We are reaching a point where, unless action is taken, we won’t have a viable sector,” Sir Stuart said, adding that it would be scandalous for the UK to have to import milk.

“We want to make sure we have farmers who we can buy from in the future. You cannot do that if you are screwing farmers into the ground.”

But Arla Chief executive Tim Smith said that importing liquid milk was unlikely. “Anyone contemplating importing milk is contemplating financial suicide. The eye-watering costs of transporting liquid milk from abroad make it unviable.

Market price

“The market price will be adjusted as we near the balance point of supply and demand,” he added. “But it is all down to market forces. We are still in a position of over supply.”

Gwyn Jones, head of the NFU’s dairy board, reacted angrily to these claims.

“We hear about market forces and the market coming into balance but that is bloody defeatist. We have a strong, vibrant market now.

“We are the most efficient producers in Europe. We get the lowest price for our milk. Others innovate and export and we blame market forces,” said Mr Jones.

“What all of this is down to is that the farmer lacks leverage and it sounds like Stuart Hampson is supporting us in that. We need to use these words as a foundation for a new, more robust dialogue,” he added.

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