Two UK dairy farmers a day are quitting the industry and the total number of producers in Wales has halved in the past decade to 2143.
Mansel Raymond, chair of NFU Cymru’s milk board, claimed existing producers did not have the confidence to invest money in the cows and equipment needed to make up the resulting decline in production.
Speaking at the Welsh Dairy Show in Carmarthen, he warned that cow numbers were falling and the crisis was so serious that processors, retailers and the food services sector could soon be very short of milk.
With 80% of Welsh milk used for cheese manufacture there could soon be massive plant closures, he said.
Experienced workers would be lost and Wales would be left with a manufacturing base unable to cope with any future increase in production.
“A year ago at this event I said we seemed to be coming out of the trough, but the picture is very different now,” said Mr Raymond.
The exodus of farmers and some of the worst weather on record meant there was a danger of UK production slipping below the 13bn-litre core requirement.
Output this year could be 2.3% down because farmers were not getting the minimum of 28p/litre needed to stay in business. They also required 2.3p/litre for essential re-investment.
“There is still an opportunity to turn this situation around and inject some much needed confidence into the dairy industry,” Mr Raymond said.
“Better contracts, which enable a subtle shift in power and place dairy farmers in a stronger negotiating position, are critical to achieving stable and profitable milk prices.”
He favoured the development of dedicated supply chains, but was unhappy that the whole industry seemed to be relying on the one operated by Tesco to set milk prices.
Lyndon Edwards, chairman of the Royal Association of British Dairy Farmers, told an eve-of-show meeting that Welsh dairy cow numbers had fallen 5.7% in five years.
“I would urge processors and retailers wake up to the fact that farmers need to be paid a fair price of an average of 30p/litre now,” said Mr Edwards.
“We need fair and adequate rewards, a sustainable milk price that is sufficient for essential re-investment purposes and to encourage the next generation.”