THE future of the UK dairy industry is in serious doubt unless there is a major restructuring, according to Richard Greenhalgh, chairman of First Milk, the farmer-owned business with 4000 members in Scotland, England and Wales.
Greenhalgh is in no doubt that changes have to be made, and quickly, to ensure the survival of both producers and processors.
He said: "The fact is that the UK dairy industry is losing market share to its European and international competitors.
"The move from doorstep delivery to multiple retailing of milk has given foreign processors a foothold, while foreign cheese now accounts for 54percent of the market and only 57percent of butter sold is British."
Greenhalgh said the loss of market share has nothing to do with either quality or availability, but rather a failure to integrate more effectively. This has resulted in a lack of funds for investment in larger and more efficient processing facilities.
He added: "So, while in the UK no single business has a market share of greater than 25percent, Denmark's Arla has a 90percent share of its domestic market, the US Dairy Farmers of America have approximately 80percent share and Fonterra processes more than 90percent of NewZealand's milk."
Successive UK governments have consistently opposed further integration of the dairy industry, a policy in direct contrast to the rest of the EU. The losers have been milk producers.
Greenhalgh stated: "The fear has always been that bigger processors would result in higher prices, but the world is a different place to what it was when the Office of Fair Trading was first established in 1973 ."
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