Published yesterday, Kite's survey and forecast indicate that milk production will continue to fall over the next five years as farmers leave the industry because of low farmgate prices.

Even if buyers boost prices to balance supply and demand in that time, the industry could see a real shortage of milk in the five years after that, the analysts say.

Though not so doom-laden as the worst-case forecast of a two billion litre shortfall made recently by government adviser Professor David Colman of Manchester University, the Kite report's author, Neil Blackburn, has a warning.

It is that the farmgate price must be more than 20p per litre to halt the decline in production and encourage farmers.

Source: business.scotsman.com