be advantages in the feed industry looking at scenarios for supplying the feed to produce the extra yield sooner rather than later, so that the infrastructure is in place to allow the new units to operate efficiently.
PROCESSING THE MILK There is no point at all producing the milk, if there isn’t the capacity to process it for the appropriate market. There needs to be the right capacity in the right places and investment will be necessary in both modernisation and expansion of existing plants and the development of new facilities. This will require the processing sector and the farming sector to work closely together, to ensure the supply chain is as efficient as possible. Any increase in milk production must be aligned to sustainable
market demand, as any oversupply or imbalance will only weaken farmgate milk prices. There will be potential opportunities in both domestic and export markets for the additional production. Some UK companies have already been highly successful
in developing exports, but this takes enormous time, effort and commitment. Exports are not for the ‘in and outer’ or the ‘short termer’. Asia is commonly quoted as a potential market where UK
companies should be exploiting the huge growth being seen in this part of the world. While favourable consumer demographic changes and relatively high milk prices support the argument, we will need more than just “excellent grass” to make an in-road into these markets. A deep understanding of export markets is needed in order to be
successful. Competition is fierce from local suppliers, and these markets are also highly contested by the established international players in the
global dairy markets such as NZ, Australia, the US, the Netherlands, Denmark, Germany and Ireland. For example, Ireland’s future plans for the development of their
industry is based firmly on a clear strategy to expand production post quota by as much 50% and export it – mainly to emerging markets in Africa, the Middle East and Asia. This has already started to happen with Glanbia investing £126 million to convert 1.6 billion litres of milk into dairy ingredients at its new facility in the South East of Ireland. There is, however, perhaps a danger of becoming preoccupied
by the emerging markets and ignoring excellent opportunities closer to home. Western Europe is still home to around 500 million relatively affluent consumers, with well-defined supply chains and routes to market. In our own domestic UK market, there have never been so many ways of getting dairy food products to consumers. There is a real sense of major players in both the processing and retail sectors looking to get closer to suppliers than ever before in order to ensure security of supply and satisfy the “buy British” desire. Opportunities abound for those that want to take advantage of them. The fact that the UK imports more cheese than it produces and could utilise 2 billion litres of milk by replacing just 50% of these imports with home produced milk is a glaring example.
JOINED UP APPROACH A production increase of the magnitude described in the DSCF vision statement following a prolonged period of contraction will not happen overnight. But it offers a huge opportunity to grow the industry to compete globally. It will require innovative thinking and people prepared to commit to new ideas and approaches in both farming and processing. What is clear is that the industry as a whole must decide how quickly it wants to grasp the opportunity. However, what can’t be denied is that an expanding British dairy sector is in all of our interests and something we should all support and encourage.
John Giles is Divisional Director at Promar International, the value chain consulting arm of Genus plc. He can be contacted at
john.giles@
genusplc.com
PAGE 32 JANUARY/FEBRUARY 2014 FEED COMPOUNDER
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