The UK dairy industry needs to take control of its own destiny in order to meet future domestic and international challenges successfully, Dr David Dobbin, Chairman of Dairy UK, said today.
Speaking at the Semex conference in Glasgow, Dr Dobbin said the industry is having to endure extremely difficult conditions as a result of oversupply of milk globally, intense price competition in falling markets, lower returns and deflation.
He said: "We know what the problems are and there is no shortage of them. We understand that global milk supply is still growing too fast and is outstripping demand and we are not immune to significant factors such as the slowdown in the Chinese economy and the Russian ban on importing products.
"Our options are to wait it out, protest, face new legislation or we can up our game and take charge of our own destiny. Our industry's problems are down to global oversupply; we need to develop the demand for British dairy products and invest in promotion both at home and in target export markets."
"Speaking not only as the chairman of an industry body but also the chief executive of a dairy business, whether you are a farmer or processor, we all share the objective of economic sustainability and we need to build an industry where processors are profitable and able to pay a competitive and sustainable milk price to our farmers. The British dairy industry needs to become more competitive right along the total dairy supply chain reducing cost and becoming more efficient. Taking up the recent comments by Sir Peter Kendall, we need to increase the rate of productivity improvement on farm from the current average 1.4%. Genetics alone will give us an annual advantage of 1.5% to 2%."
Dr Dobbin said that the industry needed to get better not just bigger and there is a need for a business model that is viable for both processors and farmers.
He said: "We need to pursue sustainable growth, be market led rather than production led and develop strategies to grow in value as well as volume. If we can make a bigger cake, then there will be more share for everyone."
Dr Dobbin said Dairy UK will be submitting a new export strategy to the Government soon which will address key issues such as trade barriers, target markets, certification processes and compliance and audit standards. He said the UK industry will have to be more competitive to grow in home markets as well as export markets.
"We have to take out cost, be more efficient and build our own USP – we have tremendous, nutritious products which we can promote as we hunt out opportunities in domestic and export markets."