Scotland Food and Drink chief executive James Withers will lead the review, which will examine ways to improve efficiency, competitiveness and exploit export opportunities.
Rural affairs secretary Richard Lochhead said: “Scotland’s dairy industry has huge potential yet, despite this, the sector has faced challenging times thanks – largely – to fluctuating market returns due to volatility in world commodity prices and outmoded contractual relationships.”
Five point action plan
Lochhead said he hoped the review’s five point action plan would introduce much-needed stability.
The review was intended to:
• Review the efficiency and competitiveness of all parts of the Scottish dairy supply chain
• Assess the opportunities for greater collaboration among primary producers and the scope for further partnership working and integration
• Consider the UK and export market opportunity for value-added Scottish dairy products
• Explore the potential for generic Scottish market development and brand support
• Evaluate primary production and processing capacity, with a view to maximising export potential and displacing imported dairy products
Lochhead highlighted the potential to add value to Scottish dairy products and to exploit the market potential offered by the Scottish premium, in order to boost both export volumes and domestic sales.
‘A decade of frustration’
Withers said: “We have witnessed a decade of frustration in the Scottish dairy industry, during which milk production has fallen and half our dairy farmers have quit. It is time for change. We have the ingredients for success with one of the most efficient milk fields in Europe, the highest standards of production and processing, rising demand for milk and dairy products and a growing national reputation for premium produce.”
Bringing about change depended upon developing a long-term growth plan for the sector and challenging existing ways of doing business, he added. “We need to think about what we could and should produce in this country, what markets we should target – here and overseas – and how we better structure ourselves.”
NFU Scotland vice president Allan Bowie welcomed the review: “We believe there is huge potential for growth in the Scottish dairy sector but we need a well-researched strategy that involves the entire supply chain and government if we are to deliver on that," he said. "The work already underway with Scottish Food and Drink as well as the SDI, Dairy UK and Scottish government looking into export and added value opportunities shows what can be achieved.”
Ministers have asked for the review to be concluded by March 2013.
Meanwhile, last week Lochhead led a delegation of 17 firms to China and Japan in a bid to boost the £1bn worth of food and drink exports to the region.
“The Chinese market offers a massive and very exciting opportunity for Scotland’s dairy sector,” said Lochhead. “The food and drink sector is one of our greatest assets and this trade visit provides a fantastic opportunity to showcase the very best of Scottish produce.”