Global demand for milk is beginning to create a fresh wave of confidence in the future viability of the country’s dairy industry.
After a summer of discontent last year over farmgate prices, which saw farmers protest outside dairies, milk prices have now reached a new high as emerging overseas markets in China, Russia and parts of Africa open up to the UK supply chain.
The great and the good of the region’s dairy industry attended the National Farmers’ Union’s (NFU) Northern Dairy Conference in Skipton yesterday and the general mood was markedly upbeat.
Speaking to the Yorkshire Post, Mansel Raymond, the NFU’s Dairy Board chairman, said the industry was “on a different plane” compared with a year ago and he called for the Government to send farmers “the right signals” so that they can invest in their businesses with confidence.
“It’s been a difficult year because it was a difficult 2012 and there was virtually no spring so there was massive added cost, but the majority of dairy farmers have had their Single Farm Payment now so that’s taken the pressure off.
“The milk price has moved up four pence per litre since the start of the autumn of last year because the world demand is there. If the price can stay high then it will put confidence into the industry.
“There is massive demand for milk. The world market is looking for extra milk and at last our prices across the UK are equal with the majority of our European colleagues but what farmers want is that stability and a period where they don’t see the ups and the downs because with that the fear factor comes back in.”
Geoff Spence, 51, an award-winning dairy farmer who produces milk from a herd of 530 cows near Northallerton, said: “I think there’s a lot of potential in the UK with the world population growth and the demand this brings.
“Dairy has stagnated for the last few years for investment and now is the time to realise it.
“The UK is probably one of the best positioned for milk production efficiency in the world because we get seasons like spring and autumn when grass is still good for grazing compared with parts of America and elsewhere in Europe which suffer from more extreme weather conditions.”
New markets expose British producers to greater market volatility but the marketplace is increasingly becoming driven by demand, rather than supply, Mr Raymond said, creating opportunities for the British dairy industry as it looks to recover from a testing time during which huge numbers of farmers have quit the sector.
“We have had reductions in milk production over the last 10 years but we’re producing seven to 10 per cent more milk in the UK than we were this time last year,” he said.
“The quality of forage and cattle is better than this time last year so performance levels are improving. Dairy farmers have been trying to improve their lot, not from the market but from trying to improve their own businesses. If they can have stable returns they will have more confidence to invest.
“I think there will be a time when we are looking at fixed prices but until then the majority of dairy farmers will except the volatility as long as they see better returns when the prices are high.”
According to official figures, the deficit in the UK trade balance in dairy products increased in 2012 by £130m to £1.27bn.
The NFU, Dairy UK and the Agriculture and Horticulture Development Board presented a draft strategy, which sets targets to eliminate the dairy trade deficit by 2025, to Farming Minister George Eustice at a Defra meeting on Tuesday.
“We have a dairy deficit in the UK of over £1.3bn when British farmers can produce that given the right signals,” Mr Raymond said.
“We need statutory powers in the UK that give farmers faith to grow their businesses and volumes because that’s what’s required to have a strong growing industry in the UK that attracts the younger people back in.”
Commenting on the industry’s joint draft strategy, Mr Eustice acknowledged that these were more promising times for dairy farmers.
“This document rightly highlights that, with UK milk production hitting a 10-year high recently, and the global milk market expected to grow at around two per cent per year over the next decade, there are great domestic and global opportunities available for dairy farmers,” he said.
“We are keen to support the industry in investing across the supply chain to boost productivity to ensure farmers can take advantage of these.”