WITH dairy cow numbers falling and prices to producers failing to rise fast enough, a milk shortage could be on the cards by the end of the year, NFU Scotland warned this week.

Calling for meetings with retailers and milk processors to discuss the urgent need for the upturn in dairy markets to be speedily fed back to farmers, the union said that it was time for a 'culture change' in the sector, with an end to the fast price drops and slow recoveries imposed on the farm businesses at the industry's foundation.

Modelling by the levy body AHDB Dairy suggests that, with UK cow numbers falling, milk production towards the end of 2016 may only just cover consumer demand. Further, by this autumn, the expectation is that the EU dairy package currently being finalised will offer farmers the option not to produce to their maximum, with an estimated 12p per litre paid on production cuts over a three-month period compared to the year before.

Milk committee chairman Graeme Kilpatrick said: “The dramatic and welcome change in dairy markets means we have an urgent need to engage with milk buyers and retailers and ensure that there is no further time lag in the upturn being reflected in farmgate prices.

“They need to realise that the EU package means producers are likely to have options this autumn if their price remains uncompetitive. It is in the gift of processors and end users to lift prices as fast and as high as they can – rather than by as much as they think they can get away with, if they want to secure supplies," said Mr Kilpatrick.

“The bottom line is that many producers have never faced more challenging financial times. The vast majority of Scottish dairy farmers are still a long way short of the point where they will see a return to profit; rebuild balance sheets and contemplate investments which have been put off for almost two years."