The recent price increases announced by supermarkets and processors were very welcome, but prices are only the tip of the iceberg when it comes to the range of issues over which the dairy industry is battling for its economic life.

Speaking yesterday (Tuesday) at the central London debate on milk prices, hosted by the Women’s Institute, Mr David Curry, chairman of Dairy UK, said that environmental concerns flowing from climate change, increasing pressure on food manufacturers from a government increasingly alarmed by the problems of obesity and a rapidly changing consumer market place are changing the environment in which the industry operated.

As milk buyers increasingly bought into processing farmers should look to earn a return as shareholders as well as producers. The industry itself had to pursue further rationalisation to generate the returns for investment in the new products and to maintain the modernisation of manufacturing capacity. Branded products – including liquid milk – would grow in importance.

“However tempting it is for farmers to want to crawl back into the womb of the Milk Marketing Board the fact is that innovation and enterprise in this fast-moving and hugely competitive sector will not be well served by a regulator.“ He commented.

“We already face increasing regulation on environmental matters and the recent Ofcom decision to ban advertising of so-called “junk” foods during children’s television suggests that we are heading the same way on lifestyle issues.

“The industry- from retailer to processor- has shown that it responds both to market signals and to consumer demand and these are by far the most efficient “regulator” the industry could face.”

It was too soon to see if the recent price rises would stem the exodus from the industry by farmers. “The market fundamentals remain the same: it is a buyers’ market subject to pressure from CAP reform and responding, ultimately, to commodity movements. The price rises give a desperately needed boost to parts of the industry but they should be seen as the first steps in putting the industry back on a more sustainable footing.” said Mr Curry.

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