Milk supply set to dwindle as more farmers give up

There will be a further decline in the number of milk farmers and possible milk shortages within a few years, according to a study for the Department for Environment, Food and Rural Affairs (DEFRA).

Professor David Colman and Yaqin Zhuang of the University of Manchester found that 12.4% of 363 dairy farms surveyed in England and Wales had ceased farming between April 2003 and April 2005 and that 8.7% of those remaining in April 2005 were likely to quit. A further 8.4% were uncertain about their future.

"A significant proportion of those who have remained in milk production to the end of the 2004--5 marketing year are definitely aiming to give up in the next five years," said the study.

The authors estimated that total UK milk production was likely to fall 1.1bn litres below the 14.4bn quota level in 2007--8. Farm closures in the study period had not been outweighed by a 5.3% increase in production by those farmers who remained.

DEFRA said that it was still studying the report but there was a widespread belief that the government could do little to reverse the decline.

There would be a further rapid fall in milk production before the market stabilised, said Ronald Akkerman, the md of Partners in Cheese (PiC), which needs 150m litres of milk a year to supply a proposed £44m cheese factory in Cumbria. He said: "The speed of the exit is probably going to accelerate for two or three years."

PiC's attempt to get 100 farmers to pledge to supply the proposed factory through a new co-op has been succeeding but "painfully slowly", said Akkerman. He hoped that construction of the factory would begin by next February.

No supply contracts have yet been signed, to avoid farmers breaching existing agreements, but PiC would pay 1--1.5p/l more for their milk, said Akkerman. He declined to say how many farmers had committed themselves so far with an initial £1,000 goodwill payment.

PiC is seeking a £3--4m grant to help establish and staff the new dairy co-operative, which has been renamed West Lakes Cheese from Lakeland Dairy Farmers after a dispute with a similar-sounding business.

PiC has also applied for government investment and processing grants for the project, which would require £16m of equity.