A report by the Milk Development Council (MDC), requested by NFU Scotland
and published on Monday, has for the first time provided an objective analysis
of the possible consequences of a significant reduction in milk production
by British dairy farmers, which has been called for by some processors.
The report, entitled “Routes to Profitability: Is reduced
milk production the solution?”, concludes that there is
no straightforward solution to the problem of low profitability
of dairy farms caused by poor farm gate prices for milk. It emphasises
that the only way in which production can be reduced is through
further cuts in price. But reducing production would fail to
deliver a higher or even stable milk price. Instead, dairy farmers
would face further price volatility and uncertainty.
Reacting to the report, NFU Scotland Vice President Jim McLaren,
“I very much welcome the fact that for the first time
we have an objective analysis of the effects of reducing milk
production in Great Britain. The most important message I take
from this report is that there is no simple answer to the problems
facing dairy farmers. Reducing production is not the panacea
that some would suggest.
“The report confirms that British dairy farmers are amongst
the most efficient in Europe, and that there is therefore no
reason for us to concede any part of the market to our competitors.
It also shows that, even if we stopped producing milk to make
into butter, milk powder and mild cheddar, the new milk price
could be lower than today’s. And to stop producing these
products altogether, we would have had to lose anywhere between
20% and 45% of our dairy farmers, affecting not only the livelihoods
of farming families but also many other rural businesses and
significantly changing the landscape of the British countryside.
“The report suggests that rather than looking at reducing
production, it would be more productive for the industry to focus
upon alternative strategies. These include improving efficiency
throughout the supply chain, adding value through innovation
and renegotiating contracts that focus on these objectives.
“The report lays down a challenge to the whole industry
to focus on these areas. British dairy farmers are among the
most efficient in Europe but we’re not saying we’re
perfect. The world doesn’t owe us a living and we are all
obliged to look at every cost and strive to remain an efficient
“Likewise, the processing sector has a responsibility
to continually look at innovation and branding and work with
producers to drive the industry forward. It is this, combined
with a more transparent supply chain, which I believe will keep
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