UK’s dairy deficit plans could reinvigorate sector

By Nicholas Robinson

- Last updated on GMT

Related tags: International trade, Dairy uk

UK milk production has declined by a quarter in the past 30 years
UK milk production has declined by a quarter in the past 30 years
Producing an extra two to four billion litres of UK milk annually will be a “significant challenge”, but will yield great financial benefits for the UK economy.

That was the opinion of John Giles, divisional director of farm and agri-food consultancy Promar International. He was responding to ambitious plans from the dairy sector to grow output, eliminating the UK dairy trade deficit in value terms by 2025. 

The National Farmers Union (NFU), Dairy UK and the Agriculture and Horticulture Development Board (AHDB), published a joint draft strategy last week, which set out targets to claw back the UK’s £1.2bn dairy deficit. 

Three themes​ 

The plan evolved around social, economic and environmental sustainability. “We’re trying to reverse what’s been going on over the last 30 years, by growing our share of both domestic and international markets,”​ said Giles. 

Over the last decade global dairy production had increased by 2.1% each year, statistics from the Organisation for Economic Co-operation and Development (OECD) have shown. In the next 10 years, global dairy production is expected to increase by 153bn litres, with most coming from developing countries. 

However, 25% of global dairy production is expected to come from developed countries like the UK, which has experienced a decline in milk production of around a quarter in the past 30 years. 

30% output increase​ 

“Producing an extra 2–4bn litres is a significant challenge, requiring total UK output to increase by around 30%,”​ Promar director David Cooke said in an insight report last month. 

Only part of the increase could be managed with the existing herd, he warned, which had declined by two thirds in 30 years. 

Meanwhile, Giles said there were three ways to stimulate UK dairy sector growth. “Increase domestic consumption,” ​was the first area to focus on, he said. 

“Build export markets – there’s a lot of talk about the opportunities in Asia for meat,” ​he added. “The dairy sector should be working towards that too.”​ 

Reduce imports​ 

Finally, he said the need to decrease the amount of dairy imported into the UK was vital. “In particular we import around 350,000t of all cheeses, from the likes of Ireland, France, other EU markets, Australia and New Zealand per annum.

“If you replace some of those imports with domestic production, you could boost exports and make a contribution to ​[reducing] the deficit.”​ 

NFU chief dairy advisor Rob Newbery said the global demand for dairy products was going to grow significantly as a consequence of population growth and changing consumption patterns. 

He urged the British dairy industry to seize the opportunity for growth and said it was “well-placed” ​to respond to the challenge. 

Duncan Pullar, AHDB DairyCo sector director, said the whole dairy chain needed to invest and innovate to “become more efficient and strengthen routes to market”,​ to achieve the results. 

“We believe that our target to achieve a zero UK dairy trade balance value in the next 10 years, from the current £1.2bn deficit is challenging, but realistic,” ​he said.

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