Dedicated supply chains and better prices underpin first shoots of farmer confidence

The 2010 DairyCo Farmer Intentions Survey has revealed a small rise in confidence levels, in particular for those dairy farmers who are part of a dedicated supply chain.   

Though nine per cent of UK dairy farmers are intending to leave the industry within the next two years, equating to around 1,174 dairy farmers, 32% of farmers are planning to increase production. This means that for the first time since the survey began in 2004, milk produced by dairy farmers planning to increase their production is expected to more than cover that lost from those leaving the industry. 

Its a positive indication but comes with a warning: Weve had two years of relatively good prices, says Ken Boyns, DairyCo sector director, added to this we have seen the development of a number of dedicated supply chains, and this must continue if the surveys predictions are to become reality, and farmer confidence is to grow. 

The small rise in confidence levels is reflected in a number of factors in the report, in particular in the way that more farmers now appear to be planning for the future.  

There has been a significant shift between the 2009 and 2010 survey in the number of farmers intending to implement a succession plan in the next 10 years, up from 24% in 2009 to 43%.  This suggests the industry is attracting more entrants and younger generations to join or remain in the industry, says Mr Boyns which is very encouraging for the long-term future of the British dairy industry. 

In general, the level of intended investment has risen slightly when compared to last year, and is now closer to 2008 levels, with the largest change in those intending to invest over 250,000.  Nine per cent of farmers intend to invest over 250,000 in the next five years, compared to 2% in 2008 and 2009. In addition to this the announced investment in the liquid processing sector and investment from the retail end in dedicated supply chains are likely to help the British dairy industry become more efficient and maintain the increased confidence the industry is beginning to show, concludes Mr Boyns.

DairyCo is a division of the statutory levy board, the Agriculture and Horticulture Development Board (AHDB).

DairyCos current focus is on improving the profitability of dairy farming by focusing on four specific areas:

• Provision of high quality market information to help farmers and their representatives make the most of dairy markets and opportunities.
• Helping dairy farmers increase their profits while meeting regulatory and environmental requirements through the provision of world class research programmes and practical on-farm tools and services
• Helping promote the positive perception of dairy farming with the general public.
• The development of DairyCo activities towards a self-sustaining model.

DairyCo is funded entirely by milk producers, via a statutory levy on all milk sold off-farm, at the rate of 0.06p per litre.  This provides an annual income of around 6.5m.