Pay farmers more to stop milk slump – Andersons

By FWi staff

DAIRY companies need to pay farmers more for their milk to prevent a damaging, long-term slump in production which could ruin the industry, Francis Mordaunt, of farm business consultant Andersons, concludes from a company report aimed at dairy processors.

The report spells out why the UK is short of milk. Output has been below quota every single month this year, apart from August, says Mr Mordaunt.

“We expect that production will end up 9-10 days-worth of milk below profile at the end of this milk year.

This is only the third time the UK has missed quota since 1984, and it is by far the biggest undershoot.”

Indeed, the shortfall is so serious that unless dairy farmers are encouraged to invest soon, it will be repeated next year, he believes.

That may cause permanent damage to the UK dairy industry, says Mr Mordaunt.

“Dairy farming could be exported from this country, with increased imports making up for lost domestic production.”

Most of the reports findings are confidential. But it largely blames the sharp reduction in cow numbers for the slump in production.

These fell by 4.3% in 1999/2000, according to ministry figures. That compares with an annual average of 1.7% since 1992.
Big yield increases are already needed to offset this reduction, says Mr Mordaunt.

Cow numbers will not increase quickly because there are fewer heifers coming forward and imports from the Continent will be limited by the BSE crisis.

But higher yields mean better feeding regimes, improved genetics and better management, which all cost money, he adds.

“Farmers need to be able to invest capital, repay it and eventually replace it.”

Most of the 1.9ppl average increase last October has already disappeared in higher feed, fuel and fertiliser costs, and farmers need at least 1.5ppl more this spring, he adds.

• The UK Under Quota But For How Long? is available from Andersons on 01664 567766 or research@andersons.co.uk
• www.andersons.co.uk