UK milk production draining away

Milk production is set to fall another 5% this milk year as dairy farmer confidence drains away.

The latest Farmer Intentions Survey from DairyCo, released today (Tuesday), shows that the number of dairy farmers intending to increase production in the next two years stands at just 18%.

This compares with 35% in the same survey a year ago and, according to DairyCo, is insufficient to cover the lost production from the 13% of milk producers who are intending to leave the industry.

As a result, GB milk production is expected to fall 4.9% by 2010/11 to 10.5bn litres.

This is despite the survey showing that almost half of British farmers actually have space available for extra cows and that, if all the additional cow spaces were full, annual milk production could increase by 5.4% to 11.6bn litres.

The clear drop in farmer confidence raises serious concerns for the industry, says Helen Eustace, acting head of DairyCo market intelligence explains.

“It suggests that, although milk prices remain relatively high, high production costs and an underlying mood of uncertainty, for example, the current falling milk price, are still undermining farmer confidence.”

The survey also highlights falling levels of investment on-farm with nearly 60% of farmers having less than £25,000 to invest over the next five years.

But it does show that some farmers are looking to the long term and, of those planning on staying in the industry for the next two years, 80% believe their dairy units will still be running in 10 years time.

“This suggests there may be a considerable slow down in the rate of farmers exiting the industry, providing confidence and profitability are sufficient,” says the report.

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