Dairy farming might be enjoying a new lease of life as consumers focus more on locally produced food and drink following last year’s Covid-19 lockdown, but if producers can’t make money from milk now, they should get out.

That was the stark warning from industry commentators, Ian Potter and Chris Walkland, who said that producers should not have to rely on increased milk prices to ensure a viable future.

Speaking at the “I Can’t Believe It’s Not the Semex Conference,” webinar on Tuesday, Ian Potter hit out at the bottom 25% of producers, many of them past retirement, who should take the chance and get out now, thereby enabling a younger, more capable generation to ‘make a go of it.’

“If dairy farmers can’t survive on the current milk prices, I don’t think the banks will continue to sustain their loans,” said Mr Potter.

“Despite the challenges faced in all farming sectors, dairying is one of the few that can cope without support and the top 25% of businesses continually come out best purely because they are prepared to change and do things differently. The bottom end of producers need to get up and get out. Actual milk prices are irrelevant, it’s the margins that are important, “ he said.

“There is a great future for the dairy industry but one with a lot fewer milk producers and processors.”

While the sector has enjoyed a new lease of life as a result of Covid-19 with consumers buying more milk and appreciating dairy farmers more, concerns for the liquid market remain when supermarkets continue to sell own label at knock down prices.

Furthermore, while both speakers were more optimistic for 2021 compared to 2020, question marks remain as to how the ‘spring flush’ will affect liquid milk volumes when there were a lot of record volume milk days from September through to December last year, according to Mr Walkland.

“Dairy has come through Covid-19 pretty well as an industry with a new mantra of ‘Long Live Dairy,’ but UK milk volumes are still an issue,” he said.

“Milk volumes were consistently up during the back end of last year and what will UK capacity be this year when you consider the spring flush? Hopefully UK exports will have sorted themselves out by then, but don’t go mad on volumes,” he warned.

“Processors don’t increase milk prices until after the spring flush because they are so nervous about the trade,” said Mr Walkland.

He added that last year’s average milk price was 28.5p per litre with the best payers consistently being the cheese makers, while those at the bottom of the league were the processors providing liquid milk contracts only. Sourcing a cheese contract is however, not always easy.

Such is the expected pressure with the spring flush on processing capacity that both speakers believe prices could be corrected by March 1, and more so if there is an early spring.

A change in exchange rates could also affect milk prices either way, with the value of sterling against the Euro remaining relatively recently.