Dairy farmers should make sure their businesses are in the right shape to seize the opportunities presented by plans to eliminate the UK dairy trade deficit by 2025.
Robert Newbery, NFU chief dairy adviser and a member of the steering group for the British Dairy Industry Sustainable Growth Strategy, said there was a real opportunity to grow the UK’s share of domestic and international markets by displacing imports and increasing exports.
However, to get there we need to be working together, he said.
The growth strategy, called Leading the Way and published in December 2013, calls on farmers and the rest of the supply chain to work collaboratively to eliminate the trade deficit.
Read more: Plan to eradicate £1bn dairy deficit
Objectives for milk buyers and processers include expanding production capacity and new product development to capture emerging consumer trends. At a farm level, producers are being challenged to increase output and continue to raise efficiency.
Mr Newbery said if UK dairy farmers made sure they were among the most efficient in the world they would be best placed to benefit from the growing market.
“Farmers need to ensure they are investing in technology and skills that make them more efficient. They also need to be looking at high welfare and environmental standards. The question should be: How can I be the best that I can?”
Mr Newbery said farmers thinking in this way should be looking at the strategy of their milk buyers and decide whether they felt it was going to be one of the dairy companies “on the winning team”.
“I’d be asking have they got strong brands? Have they got a strategy to compete domestically and in export markets.”
Duncan Pullar, director of levy body Dairy Co, said producers should also be asking themselves whether they were competitive on an international stage.
“Ask ‘what is my cost of production’ and then ‘what is the margin I can reap from that’? Is that competitive on a world stage?”
Dr Pullar said if the answer was “yes” then people should keep doing what they are doing. If the answer was “no” then they could look at whether they had the right business and technical set up.
Some top performing herds on Milk Bench were making margins of 8-12p/litre and this was independent of both size of herd or system, he said.
Dr Pullar said while it might feel like the strategy would have no direct impact on an individual farm, if everyone in the supply chain did their bit then it would result in mutual prosperity.
What is the strategy?
The strategy was published in December 2013 and is based around three core strategic pillars – economic, social and environmental considerations.
It has the backing of the NFU, Dairy UK, Dairy Co, Royal Association of British Dairy Farmers, Agricultural Industries Confederation and Holstein UK.
Two scenarios are presented in the document. In the first, the draft strategy suggests it would take 665,000 extra cows to produce the additional 5.1bn litres of milk needed to balance trade in volume terms for cheddar, butter and skimmed milk powder (SMP) by 2025. This assumes an average annual yield of 7,600 litres.
A second scenario examines the increase in milk output needed to displace the 287,000t of cheese and 66,300t of butter imported into the UK. This would require an additional 4.3bn litres of milk – equivalent to an extra 560,000 cows.
Source: Farmers Weekly