Proper contracts key to long term confidence in dairy sector
2 May 2008
The results of the fifth DairyCo Farmer Intentions Survey highlight the need for proper contracts to give farmers the confidence to invest in their businesses and stay in dairy farming for the long term, the NFU said today (Friday).
NFU Dairy Board chairman Gwyn Jones said higher prices in the latter part of 2007 and at the start of this year had given some encouragement for farmers to invest, but the survey showed general confidence levels were still quite fragile.
"While the survey shows a more positive outlook for British dairy farming than at any time in recent years, the slightest hint of a drop in the milk price would tip that balance in an instant.
"This is where the need for proper contracts is self-evident. Repairing the weak link in the chain to protect farmers from the volatility of commodity markets and provide stability and transparency is crucial if famers are to have the confidence to invest in their businesses and stay in dairying long term.
"With milk in short supply, and buyers falling over themselves to secure their supply base, farmers are in a much stronger negotiating position and must take full advantage of this opportunity to put in place a proper contract."
Notes to editors:
The full survey will be available on the DairyCo website on Friday May 2 - www.mdc.org.uk
The survey shows 53 per cent of dairy farmers intend to maintain their current production level and 37 per cent of farmers intend to increase production over the next two years.
One in ten farmers are planning to invest over £100,000 in parlours, housing and general maintenance works in the next five years and a further 39 per cent are intending to invest between £25,000 and £100,000.
Milk production could fall by 30 per cent if the milk price drops by 2p per litre, and by 65 per cent if the price falls by 4ppl, according to the survey.
