Dairy processors in Britain must be more adventurous on the international market if they are to compete with foreign rivals and achieve their commercial potential, says industry body Dairy UK.
Top processors such as Dairy Crest and Robert Wiseman must adopt an ‘international mindset' instead of satisfying themselves with a comfortable domestic market, said David Curry MP, chairman of Dairy UK, at an industry conference in Warwickshire.
UK dairy companies have struggled to raise earnings throughout the sector in recent years, despite rising sales from brands, and have not made the same inroads on international markets as some of their foreign rivals.
Curry told conference guests: “It is clear that to build a better future we have to focus on better arrangements for marketing raw milk, achieving greater market competitiveness through consolidation, exploiting market opportunities for product innovation and exceeding the performance of our competitors.”
UK dairy processors already face rising competition on the home market. Britain's dairy trade deficit jumped up 20 per cent in 2005 to £893m, economists at the UK Milk Development Council warned recently.
They said this was because the UK had imported more branded products, such as Lurpak or Anchor butter, while still exporting large amounts of lower value commodities like butterfat.
Britain, despite being an important dairy market, does not have much of a presence at the top of world dairy firm rankings. The top five, according to Leatherhead Food International, are Nestlé, America's Dean Foods, France's Danone, Dairy Farmers of America and New Zealand's Fonterra.
Other big European firms listed were France's Lactalis, Scandinavia's Arla Foods, which runs Arla Foods UK as a subsidiary, and the Netherlands' Friesland Foods.
Peter Kendall, head of the UK National Farmers' Union, agreed with David Curry in a separate speech to UK conference goers. He said the whole dairy industry had to shake off a ‘can't do' attitude in favour of a ‘can do' approach.
Milk producers in Britain are currently paid the lowest farmgate price, around 18pper litre, for their milk in Western Europe. Processors argue that soaring input costs and retailer price pressure have forced them to make cuts, but the NFU has warned that producers will be forced out of the sector.
Kendall said UK milk producers were well able to take on their counterparts across the EU, “but getting the signals right in the short-term is essential”.
Jim Begg, director general of Dairy UK, said there were many things the whole UK industry could do. He said there was a positive self-start attitude developing, “but we still have some way to go in terms of what other countries are doing”.
