UK dairy farmers and processors need to keep investing to stay competitive in the post-quota world, visitors to the Livestock Event were told.
Global demand for dairy products is predicted to grow by the equivalent of New Zealand’s 20bn-litre production each year for the rest of the decade, experts said.
Exporting nations will fight to service growing markets like China and the abolition of European milk quotas in April 2015 will only heighten the competition.
UK milk production is expected to grow 3-5% by the end of the decade, but Europe’s biggest milk producer, Germany, is predicted to expand by 15%.
Mansel Raymond, milk party chair for European farmers’ group Copa-Cogeca, said other countries were gearing up for more global trade, with Ireland currently investing in two more powder plants.
“We have had a lack of investment in dairy processors and producers in the last 10 years,” he said. “That has changed and is a good sign for the industry.”
Mr Raymond cited the recent announcement of Dairy Crest’s extra £20m investment in producing a lactose-based ingredient for baby formula and a marketing tie-up with New Zealand dairy giant Fonterra as a good signal.
AHDB/DairyCo senior analyst Patty Clayton said the investment would help meet some of the UK’s domestic demand for dairy products as well as compete internationally.
“There will be no market impact on demand for milk by the removal of quotas,” she said. “Last time the UK hit quotas was 2003-04 and we are not in any danger of hitting that next year.
“What is important is that we are increasingly exposed to competition.
“Right now there is a real confidence in our industry, so we have to invest to make sure we gain efficiency and stay competitive in the global market.”
Mr Raymond also said volatile pricing and the strength of sterling were two major threats for Britain.
“Market volatility will have to be addressed and that will come down to choices from milk processors with things like fixed price contracts,” he added.
“The greatest threat of all is the strength of sterling. That has cut our milk price by around a penny a litre and imported product is cheaper to come in.”
Source: Farmers Weekly