Following cuts to prices by dairy giants in the UK, announced at the end of last month, large processors from around the world have followed suit; US-based Land o’ Lakes announced cuts today and Danish giant also announced $85 million in cost cuts. Prices for the industry in several global regions are dropping, after extremely good performance and high demand in 2011.

Worldwide, dairy prices are estimated to be at their lowest since mid-2009 and supply, which is still increasing, has far outstripped demand. This situation is unwelcome news for farmers the world over whose margins have been increasingly squeezed by the twin pressures of hungry processors and retailers and rising input costs.

At the beginning of the month, UK meat and dairy bodies including sheep and cattle organisation EBLEX, AHDB and pig meat lobbyists BPEX held a conference looking at the future of the meat and dairy markets in the UK, including the effects of recession and consumer choices.

Speakers at the Outlook Conference revealed that, although there has been a slump in prices, globally the dairy market has grown by over 4 per cent each year since 2005. However, consumer confidence in the UK has fallen and for the last three years wages have decreased.

Although GDP began to grow again in 2011 in the US, and only affected the Eurozone in the last quarter of the year, the UK has seen negative growth in three of the last five quarters.

However, one speaker suggested that there may be a small silver lining to the cloud covering Britain’s economy; the recent economic climate has meant consumers are sticking more to what they know, which could benefit traditional and local meat and dairy, according to analysts.

Giles Quick, of Kantar Worldpanel, revealed that, over a period of four weeks, 99.7 per cent of households in the UK buy dairy products and 84.3 per cent buy fresh red meat. Mr Quick referred to the £15 billion sector’s place at the heart of food retail and said British producers must play to their strengths to remain productive. Animal welfare and technological advances must be used to full effect, according to the economist.

Some food policy experts have agreed with this to an extent and suggested focusing on welfare and producing better quality meat and dairy, which will offer health and environmental benefits provided consumers eat it as part of a more sustainable diet. Earlier this week, the government’s environmental audit committee said more education is needed to ensure more sustainable eating habits are taken up in the country.

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