Threat of big fall in milk supply

Friday, 30 March, 2001

By Philip Clarke

A SHARP decline in milk supply is being predicted as the foot-and-mouth cull gathers pace, raising the pressure on milk buyers to lift prices significantly this April.

A survey of Federation of Milk Group and Dairy Industry Federation members last week suggested almost 100 dairy herds had already been taken out, equivalent to about 100m litres or three days supply.

By last Wednesday (28 March), almost 150,000 head of cattle had been slaughtered – double the level of a week ago. Assuming 60% of these were milk animals (including calves and followers), this suggests 1.5% of the dairy herd has gone already.

Coming on top of the 4% drop in dairy cow numbers recorded in the recent December census, milk supply in the coming quota year is severely jeopardised, warns the NFU.

“The market will have to deal with that,” says economist, Alex Solomon.

“The reduction in size of the UK dairy herd is beginning to assume serious proportions,” says industry consultant, Mike Bessey.

He also points to the number of missed inseminations, which will affect supplies later in the season.

But Mr Bessey expresses some sympathy for the dairies, which he says are “stuck between a rock and a hard place”.

Farmers need another 1.5p to 2p/litre just to break even. And, with many switching back to co-ops, they have more clout to achieve it.

But product prices are down on last year, especially skimmed milk powder, and any rise in producer prices will have to be financed either by a cut in processing margin or a rise in supermarket prices for liquid milk.

“The latter seems to be the front runner,” he says.