Milk producers warned of big changes ahead

A VISION of a world milk market with the price set not from within the European Union nor indeed from the dairy dominated New Zealand was heard in silence by 150 or so milk producers in Kilmarnock yesterday.

Paul Campbell, below, from the world trading dairy giant Fonterra, was clear that big increases in production in non-EU countries would swing the balance so that marginal producers in places such as China and Argentina would set the world price of milk.

The economic equation in 2020 would be vastly different from today, he said with countries such as India, China and South America upping their production while milk yields from current leading countries being largely static.

Just where the price of milk would be in ten years time, he declined to say other than to predict there would be a general convergence but he warned that the whole industry would continue to be prone to extreme levels of volatility.

Despite this foray into the future with its uncertainties and despite the current producer price being lower than many dairy farmers would like, it was a largely contented attendance that attended the annual meeting of First Milk, the UK's largest milk handling co-operative.

Chief executive, Kate Allum admitted that the company was still not "where we would like to be and we are still off the pace" in paying producers more cash.

But she insisted that, even if every additional 0.25p per litre paid costs the company some 4 million, "the company is committed to closing the gap between what First Milk pays and other milk buyers pay".

She told the 150 or so producers attending the meeting that First Milk, in addition to improving internal efficiency, was now looking at diversifying its customer base.

And she added: "These markets are not just within the United Kingdom."