Equitable contracts that reward farmers for investment and high quality output must be the foundation for a growing, profitable dairy industry, according to a new NFU dairy strategy.

Launched at the Livestock event at the NEC on Wednesday (3 July), the strategy 'Compete to Grow' predicts a bright future for the British dairy industry, if opportunities for dairy market growth equivalent to an additional four to five billion litres are seized.

Among them, there are challenges for the NFU, Defra, Dairy Co and Dairy UK to work together in order to create the right environment for British dairy farmers and the dairy supply chain to thrive.

NFU dairy board chair Mansel Raymond said on Wednesday, "The future presents a number of opportunities to British dairy farmers who are prepared to look to the future and invest. Population growth and consumption trends suggest the global and domestic dairy market will grow.

"Growth at farm gate can only happen in conjunction with increased processing capacity. While much has been said about investment in liquid milk processing, growth will also require more state-of-the-art processing capacity for other dairy products," he added.

He expressed a desire to increase domestic production and processing, but said the only way to achieve this is by ensuring farmers and processors can trust "in each other’s will and ability to invest and produce what the market wants and seize these opportunities."

Mr Raymond's view was also backed by the Royal Association of British Dairy Farmers. RABDF chief Ian Macalpine  said, "All the signals are that the world market should give the industry an opportunity to thrive in the future, and RABDF Council… is enthusiastic and optimistic."

Ahead of the Livestock Event, the NFU welcomed news that 85 per cent of the processing market is now signed up to the code of practice. The code was established in the wake of dairy protests last year.

However, former Dairy Coalition member Farmers for Action split with the rest of the movement (made up largely of Britain's farming unions) over a lack of support for FFA's continued use of direct action tactics and amid accusations from FFA leader David Handley that the other Coalition groups had taken a "weak line" on processors' failing to comply with the code.