Better outlook for dairy?
It with some considerable hesitation I write in relativelypositive terms about the prospects for UK dairy farming. I recall doing so just over a year ago following the Agriculture and Horticulture Development Board’s (AHDB) annual Outlook Conference. I quoted the Food and Farming Minister, George Eustice, who encouraged us all by telling us that the demand for UK food and drink exports was increasing with potential for further growth. In fairness, IDF was also forecasting increasing global demand for milk and dairy products.
It was all good news. Then a spot of bother broke out in Eastern Europe, the world market oil price collapsed, European country economies were at a standstill, and the global demand for food and milk products fell. Milk price on the world market went into steep decline with serious knock-on consequences for milk price here at home. Hence my caution; but here goes……
Glimmers of light
Some glimmers of light for the dairy sector were detected at this year’sAHDB’sannual Outlook Conference held recently in London. According to the Future Foundation, worldfood markets are expected to grow over the next five years, especially in emerging countries. Increasingly the emphasis will be on good quality food, provenance and authenticity. The presentation forecasted that ethical concerns will influence consumers more than at present, yet price will still be a key influence. Consumers will expect greater and a desire for new food innovations and tastes.
In a review of the Asian food market by the Institute of Grocery Distribution, it was emphasised that the population of Asia is forecast to becomealmost 60% of total world population, including over one half of the world’s middle classes, which will create increased demand on food supplies. The growth in the new middle class is driving up the demand for more and better products andas consumers become more affluent, they are expected to require more protein in their diets with milk and dairy being key providers.
The Food and Agricultural Organisation hasforecast that total dairy consumption in the world will grow by 12% in the period 2014 to 2020, and by 50%by 2050.Growth in Asia was expected to grow by 21% compared to 4% in Europe, with the result that dairy demand in the coming years will be dominated by Asia.
UK dairy farmer confidence stronger
In relation to domestic milk production, AHDB undertakes an annual survey of dairy farmers to investigate the level of confidence in their own farming businesses and the industry generally, and in doing so identifies production and investment intentions. Whilst there is no hiding from the fact that that short-term confidence had taken a knock,the survey showed that one third of those surveyed planned to expand in the next two years. Those planning to invest would do so largely in infrastructure, farm buildings and equipment.
A key finding of the survey was that in the longer term, five years plus, dairy farmers were relatively confident about their business prospects and also about the industry generally, as the global long term demand for dairy products was positive.If this is encouraging news for UK dairy farmers, it may seem to some like jam tomorrow, but, I bravely, perhaps foolishlysuggest, better than no jam at all.
JOHN SUMNER