There is barely enough milk on the market to satisfy demand, with at least one dairy farmer sending his cows down the road each and every day of the year. The consequence has been a rise in the ex-farm price of at least 30 per cent in recent months.

This week a group of dairy farmers, including officials from NFU Scotland, the NFU of England and Wales and the Ulster Farmers Union (UFU), made a visit to Dumfries and Galloway, which is the heartland of milk production north of the Border. The itinerary took in the Scottish Agricultural College's centre for "dairy excellence" at the Crichton Royal Farm and the Rowan Glen yoghurt factory in Newton Stewart.

Stewart Wood, vice-president of NFUS, said: "The medium-term outlook for the dairy market is positive and milk producers can look ahead to more optimistic times.

"However, this must not lead to complacency. The industry has to continue to consolidate, secure its competitiveness and seek to innovate while adding greater value to its products."

That sounds fine in theory, but costs have risen dramatically in recent months. Compound feeds, which all cows require to produce a decent yield, are now £50 per tonne higher than last September. Fertilisers, essential to grow grass and silage crops, are up by at least £30 per tonne, while fuel and interest charges are also on the rise, and set to go still higher. These cost increases equate to as much as 3p per litre and are quickly eating into higher ex-farm prices.

Source: Scotsman