9% slump forecast for milk sector

MILK PRODUCTION could fall by as much as 9% over the next two years, according to provisional survey results from the Milk Development Council.

“There is a lot of concern about the future,” said Ken Boyns of the MDC‘s information service, Datum.

Intervention support for dairy commodities will be cut by 22% by 2007/2008, assuming no change in currency exchange rates.

That is expected to force milk prices down by about 4p/litre, to 15p/litre.

“At the moment there is some downward pressure on milk production,” said Mr Boyns.

The survey showed that, of 513 dairy farmers, over 20% planned to cease production over the next two years.

These producers were at the smaller end of the scale, with only 86 cows each, on average.

Larger farmers, with an average herd size of 144 cows, planned to expand over the same period, with 18% of the survey saying that this was their intention.

Almost 40% of farmers planned to remain at the same level of production and over a fifth did not know what they would do.

Mr Boyns said the survey results were not fully weighted and were therefore only provisional.

“But if you assume that people do exactly what they say they are going to do, milk production will fall by about 9% over the next two years.”

If this did happen, quota prices would also drop, making it cheaper and easier for farmers to expand, said independent consultant Mike Bessey.

It would also ease the downward pressure on milk prices, he added. “There will be more competition for what milk is left.”

That could change peoples‘ minds about leaving the industry and could even encourage more farmers to expand, he added.

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