April 27, 2007


UK's dairy problems traced to overproduction of low-value milk



Dairy farmers in the UK should not pin its woes on supermarkets or global commodity prices, but on overproduction of low-value milk on a limited market, according to senior lecturer Dr John Lingard.


Reacting to an article made by British journalist Felicity Lawrence which stressed "industry body Dairy UK believes the weakness of global commodity prices is the main cause of financial pressure on farmers" Lingard, who teaches in the School of Agriculture, Food and Rural Development in New Castle University, said a solution to the supply-demand imbalance could be for farmers producing milk near to large, urban areas to establish cooperatives to supply this high-priced market direct. However, he said there remains the danger that they would oversupply the market. Alternatively, Lingard said farmers could seek high-value niche markets for milk products such as yoghurts, ice cream and organic milk.


British milk production over the past decade has averaged just over 14 billion litres, of which 0.5 billion litres are exported. Little liquid milk is imported - only 70 million litres in 2004.


Lingard said Lawrence's statements that "over half the UK's dairy farmers have left the industry since 1995 and this is causing alarm" is misconstrued as long-term security of milk supplies does not depend on "how many smallish - probably inefficient - dairy farmers pack up production, because their cows often move to a neighbouring farm to continue production".


On the demand side, Lingard said over half of domestic milk production has to be diverted from the lucrative liquid market to the manufacturing sector - 3.5 billion litres to cheese, 1 billion to skimmed milk powder, and smaller amounts to butter, cream and condensed milk. Liquid milk consumption has fallen dramatically over the past 40 years, and health concerns over butter, cream and full-fat milk have impacted on consumer demand. Low-fat milk account for 60 percent of demand in the UK; doorstep deliveries are down to only 15 percent of total sales.


Lingard said it is easy to produce milk in the UK's green and wet land, but very difficult to find markets for more than 14 billion litres of milk. Until dairy farmers resolve this dilemma, Lingard said many more will continue to go out of business.