The dairy industry was yesterday urged by four of its leaders
to use rising milk prices wisely to lay down sustainable and profitable
foundations for the future.
The advice came at the launch of a new report Routes to Profitability
2: practical steps forward, which examines why and how the industry
should focus on developing innovation, relationships and efficiency
as a long term way out of current price and supply difficulties.
Chief executive of the MDC Ken Boyns, NFU Scotland president
Jim McLaren, NFU Dairy Board chair Gwyn Jones and Dairy UK director
general Jim Begg appeared together at the launch of the report
- which was produced by the MDC at the request of NFU Scotland
- to give an unprecedented joint statement.
They collectively welcomed the report's contents, especially
the opportunities it identified to turn around the UK's growing
trade deficit in dairy products, which increased to £944
million in 2006.
They agreed that the recommendations for high levels of on-farm
efficiency matched by similar measures from milk processors could
create a platform for investing increased market returns in added-value
products. While it was accepted that new products could be expensive
and difficult to introduce, the report identified clear opportunities
for 'quick wins', for example by differentiating existing produce
on the basis of provenance.
Ken Boyns said that overall there was one clear message from
the report - the need for producers, processors and retailers
to focus on long term goals and make the most of these medium-term
improvements in prices.
He said: "The increasing prices in the commodity markets
should put a much-needed floor in the market and this will finally
give many producers the means to invest in their future.
"But the report shows clearly the means by which we can
improve the long term future of the industry. So it's important
to make the most of the increasing prices and 'make hay while
the sun shines'."
Jim McLaren echoed this sentiment, explaining that there were
tremendous opportunities to add value to the UK dairy industry. "There
is an enormous and growing trade deficit for dairy products in
the UK, primarily because we are exporting low-value products
like cream and importing high value cheese and butter. We need
to turn that around if we are to have a viable future.
"There is also increasing public attention being paid to
the environmental integrity of our food and drink, its provenance
and its health benefits. That is against a backdrop of a more
positive milk market which should lead to improved farmgate and
"In other words, we have an opportunity over the next two
years to invest and lay a foundation for a profitable industry,
to the benefit of everyone in the supply chain from farmers to
Gwyn Jones agreed it was vital dairy farmers recognised this
unique opportunity to change the dairy industry so that it would
be better equipped to face the future.
"We must ensure that we are not as exposed to commodity
markets in the future," he said. "We need better contracts,
more innovation, more branding and added-value products, which
should all be cemented in a desire for long-term relations and
a commitment to work closer together as an industry."
Jim Begg added: "The UK dairy industry has very good reasons
to be optimistic for the future. Rightly, it is focusing very
heavily on adding value to milk and making sound structural preparations
for the future. At a time when milk prices are rising it is imperative
that all efforts are being made to bring, producers, processors
and retailers together in win-win situations."
Routes to Profitability 2 is the follow up document to Routes
to Profitability: Is reduced milk production the way forwards?
which was published in 2006, also at the request of NFU Scotland.
While starting out as an examination of whether reducing milk
production was a viable way of increasing the milk price, it
concluded there were three key elements to a successful future
industry: - innovation and consumer education to stimulate and
grow demand - better relationships within the supply chain to
provide a fair return to all - efficiency and competitiveness
in all parts of the supply chain.
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