Declining milk production in the UK will continue into next year, according to reports.
According to an article in The Scotsman, milk supplies, which recently hit a 37-year low, will drop again towards the end of 2008, and stay low next year.
Industry commentator, Ian Potter, is quoted by the newspaper as saying: "Production in June was down by over 20 million litres on the same month last year. This decline shows no sign of halting and unless ex-farm prices increase there will definitely be less milk on the market."
The decline is nothing new to the industry, and Jim Begg, Dairy UK Director General, told DairyReporter.com: "Dairy UK is concerned over the continued decline in milk production. Unless checked it will eventually impact on supplies to fresh product markets over the trough, although this eventuality is still some time off. Dairy farmers are clearly responding to cost pressures."
On a lighter note he did say that there is "commercially every reason to be confident about the future of the industry".
"There is strong demand for product make from UK milk and the industry is working hard to add more value to milk to get more out of the market place. The industry's customers have also shown a willingness to pay a premium to secure supplies.
"Long term the commercial outlook is positive however at present, increases in fuel, fertilisers and feed costs are major pre-occupations for dairy farmers. Consequently there is insufficient investment by farmers to make up for the volume being lost by those leaving the industry.
"Where there are real uncertainties is in the regulatory environment and the Government's commitment to the industry," Begg told this website.
The threat of TB
According to official statistics, 28,000 animals were slaughtered last year because of bovine tuberculosis (TB), but The Scotsman carried predictions that this year's death toll may hit 40,000 animals. Over half of these animals will be dairy cows, it states.
The National Farmers Union (NFU) for England and Wales estimated that TB reduces milk output by 300 million litres per year. It is estimated to cost the British taxpayer and staggering £100 million annually.
Speaking from the UK's House of Commons in London, Member of Parliament (MP) David Curry said last week that the entire industry continued to face crises at both a consumer and farmer level regarding issues of nutrition and supply.
Dealing with these areas are therefore likely to remain key areas for future development, particularly in light of dairy farmer concerns across Europe over cost sustainability, he said.
Curry told DairyReporter.com last week that if the industry is to survive and thrive in the future, it must ensure it is providing value for money to the farmer at one end of the food chain, and to the consumer at the other
"If you look at the type of products we have on the market now from ten years ago, not least in probiotic yoghurts and other functional products, this is an important area of focus for the industry," he said at the second annual Dairy UK reception.
"The focus on added value will be vital in ensuring cost stability for everyone in the industry."