Surge in dairy investment in eastern counties, says top East Anglian adviser

Ben Watts, of Aldeby, partner of Kite Consulting

Ben Watts, of Aldeby, partner of Kite Consulting - Credit: Submitted

A surge of investment in more efficient milk production in the eastern counties was already taking place, said East Anglian dairy consultant Ben Watts.

After years of declining profitability, the scrapping of Europe's milk quotas from next year presents a major opportunity for the dairy sector, he said.

'I've got more buildings and milking parlours going up this year than at any time in last 17 years of doing this job. It is go,' said Mr Watts, who is a partner of the industry leading specialist advisor, Kite Consulting.

Newly-elected industry leader, Rob Harrison, of the National Farmers' Union's dairy board, said: 'Our industry faces an exciting future of growth and my focus will be ensuring that our members get every possible opportunity.'

Mr Harrison farms 430 acres near Moreton-in-Marsh, Gloucestershire, and succeeds Mansel Raymond, who is the twin brother of NFU president Meurig Raymond. 'Everyone is reasonably upbeat at this moment in time. We've had a better last six months and there's the future demand for our products which overall makes people more optimistic,' he said.

Mr Watts also has farmers considering investment in new dairy units to replace tired buildings and milking parlours. 'There will be some beef farmers converting to dairy while there will be a natural progression of some people going out of cows as well,' he added.

The transformation of the industry's fortunes had been driven, partly by years of under-quota production but crucially higher real returns from dairying. His Kite colleague, David Levick, said that in the late 1990s, the average margin was just 0.58p per litre. 'It is easy to see why morale has been so low over the past 15 years,' he added.

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A combination of export bans following BSE, which resulted in massive over-production issues in the UK, had led to a collapse of milk prices for producers. 'The outlook was bleak as there was literally no return on investment with quota leasing swallowing up what little there was,' he added.

It was to take almost 20 years for producer milk prices to recovery the heady levels of 26p litre achieved by the industry in 1994.

Mr Levick's latest calculations for this year reveal a dramatic reversal with the margin over feed and forage improving to 21.01p per litre. This has been possible because of 'a much higher milk price and a better world market for export,' he added.

After almost a quarter of a century of significant investment, Mr Watts was working on plans for three or four new milking parlours and also potentially two on greenfield sites in the next two or three years.

There was also increasing interest in energy-saving aspects of dairying including variable speed vacuum pumps to reduce electricity consumption.

Mr Watts was one of only six people from Britain among the 450 delegates at last December's largest specialist dairy conferences in the United States at East Syracuse, New York.

He was 'cautiously optimistic' about the long-term future. 'The dairy industry has got to look at innovation and new products. There is a demand for dairy around the world but there is also a growing population in this country and an opportunity to meet this demand as well. When you look at the balance of trade, we're still importing more than we're exporting,' he added.

Mr Harrison said that the dairy sector had a growing domestic market on its doorstep. The impact of the national dairy campaign of two years ago, which had highlighted the impact of very low producer prices, had won consumer backing.

There was recognition that there was a cost to producing a quality product. 'We've got very high environmental standards in the UK and we're very good on animal welfare. If you expect us to produce milk to that standard which is what we can do then there is a cost to that compared to milk produced in other parts of the world,' said Mr Harrison.

'We're currently not self-sufficient in dairy products – so actually, there's huge opportunity for us to produce more to fulfil our own market,' he added.