Tough times ahead as milk production sinks to new low

The UK’s dairy industry faces a difficult future as milk production fell to its lowest level for 30 years, industry experts have warned.

Milk production was 11.4% below quota for September, with butterfat-adjusted deliveries at 1009m litres, according to Charles Holt/Farmers Weekly figures.

Milk deliveries for the year are expected to be 1.5bn litres below quota, at just 13bn litres.

Charles Holt of the Farm Consultancy Group said milk production was at a “phenomenal low” because of poor weather and farmers leaving the industry.

Two dairy farms were closing every day as increased costs, an ageing workforce and bovine TB took their toll on the industry, he said.

And unless processors were able to add value to their milk, some processing plants could face closure in the coming months, he added.

“It’s certainly a shaky future for the industry.”

John Allen of Kite Consulting said he expected milk production levels to continue to struggle as the national herd continued to contract for two more years.

The number of cows in the UK has fallen by 300,000 in the past two years, to just 1.9m.

Mr Allen said the UK was importing 1m litres of milk a day and warned that imports from Northern Ireland, Holland and Belgium could increase if farmers continued to leave the industry.

“If we hadn’t seen a milk price increase from Tesco earlier this month, then I think we would have seen a meltdown,” he said.

“The increase might not seem much, but hopefully it will give farmers enough confidence to carry on.”

Auctioneers across the country said they expected to see a continued stream of dairy farmers leaving the industry unless more was done to make dairying more profitable.

Tom Brooksbank of Norton and Brooksbank Auctioneers said the lack of long-term confidence in the industry had hit UK milk production.

“The scale of TB losses is deeply worrying and it’s adding to the underlying feeling of insecurity,” he said.

“None of it is helping to stabilise the situation.”

Super-levies imposed 

Italy and Germany are facing substantial super-levies for exceeding their milk quota in 2007/08.

Latest figures from the EU Commission confirm that seven member states are “in the red” on milk, with total fines of just over €340m in respect of 1.2m tonnes of over-production. This compares with €221m in the previous milk year.

The biggest share of the bill is being imposed on Italy (47%) and Germany (30%), although Austria, Cyprus, Ireland, Luxembourg and the Netherlands are also being charged.

Quotas are due to be scrapped on 1 April 2015. Under its CAP health check, the EU Commission is proposing a 1% a year increase for the next five years to soften the impact.

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