Increasing Confidence in UK Dairy Industry

UK - Despite an extremely volatile year for the UK dairy industry, Bord Bia, the Irish Food Board believe that confidence within the sector will improve as prices are expected to recover over the next 12-18 months.
calendar icon 19 October 2009
clock icon 2 minute read

The drop in global demand, an increase in input costs, difficulty securing credit and the collapse of Dairy Farmers of Britain has led to a lack of confidence within the industry, says Bord Bia.

There have been some signs of improvement at farm level with milk prices rising by 0.27ppl between July and August to 23.26ppl. However, but this is 11.5 per cent (3.03ppl) lower than a year ago when milk was worth 26.29ppl.

UK milk production has continued to fall with output in 2008/09 the lowest recorded in almost 40 years. The loss in producer numbers continues with a drop of 3.5 per cent in the last year.

There is general consensus that rate of recovery will depend on the level of consolidation and investment across the industry at both producer and processor level. Following the collapse of Dairy Farmers of Britain, a recent article in The Dairyman, stated ‘If consolidation is not forthcoming through merger and acquisition, then it seems it will happen through survival of the fittest’.

Despite the volatility, there have been some significant investments happening - Robert Wiseman Dairies opened its £100m state of the art Bridgewater Dairy a year ago and Arla has announced that it will invest £70m in its Stourton dairy. A Kite Consulting report in June claimed ‘The best dairy farmers will find profitability in the medium-term, particularly when the recession is over and global demand for dairy picks up.’

If the demand for dairy products picks up as predicted, coupled with ongoing investment at both producer and processor level the overall mid – term outlook for the UK dairy industry seems more positive.

TheCattleSite News Desk

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