September 9, 2008

UK dairy farmers warned that prices of dairy products may increase this autumn due to an impending milk shortage.

Rising production costs and falling prices at the supermarket have shrunk the number of UK dairy farmers by 46 percent in the past 10 years.

Wet weather has also affected production as cattle kept indoors on silage produce less than when they are put out to grass. The shortage is expected to be passed onto consumers with a further rise in milk prices.

Milk production in 2008/09 may reach 12.9 billion litres, a sharp decline of 200 million litres from 2007/08, according to a report on the dairy industry by Kite Consulting.

The report said there may be a shortage of 0.5 million litres a day in October and November, when milk yields are lowest.

The report concluded that milk prices will continue to increase in the short-term as supplies keep falling and UK dairy products become more competitive due to the weakening of the pound.

Gwyn Jones, chairman of the National Farmers Union dairy board said the industry is losing two dairy farmers everyday, as it was hard for farmers to make a profit with rising feed, diesel and labour costs. Jones said supermarkets and dairies have to pay more for milk if the industry is to survive.

DEFRA said milk production traditionally declines at this of the year, therefore milk will be prioritised over other dairy products, with supermarkets and processors ensuring available supplies so that there would be no risk of milk shortages.