Continued milk output can no longer be taken for granted, with increased investment demands from regulation and a noticeable decline in overall sector confidence, according to Muller chief executive Rob Hutchison.
While the number of dairy herds has been on the decline for many years, milk output has remained relatively stable. But the environment for UK dairy farmers was changing quickly.
Monitoring milk output
Mr Hutchison said: "We are taking it incredibly seriously and monitoring it very carefully. Being such a big dairy business, it is really important we have milk going forward."
Attracting young entrants into the sector was critical, with Muller looking to continue to build upon the success of its ‘Next Generation' programme.
"We cannot be complacent that the volume lost from farmers exiting the industry will be picked up by other farms," he said. He acknowledged the challenging cycle for dairy right now, but still remained ‘hugely positive' on the medium- and long-term outlook for the industry.
"Ninety-seven per cent of UK shoppers buy liquid milk every week. It is really important we continue to offer that product on the shelves.
Consumer demand
"There has been a slow, but sure, 2-3 per cent increase in dairy demand at a global level - that should give cause for long-term prospect for UK dairy." He said while it was hard to predict the future of the market, the key for next year will be consumer demand.
"Consumers have been under a huge amount of pressure with cost of living crisis in UK and across Europe. While that is easing and inflation coming down, we expect it will take a little bit time to feed through into the dairy demand numbers," he added.
Sustainability plan
As well as cost being an important consideration for consumers, Mr Hutchison said high animal welfare and a ‘sustainability plan' behind their dairy product was just as important, adding products without a future environmental credentials would become ‘less relevant' in consumers' minds.
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"Under our Muller Advantage Scheme we are trying to work closely with farmers to provide a framework so they can work in the right way for their business," he said, adding sustainability also had to mean financially sustainable.
"Ultimately for us to improve the sustainability impact, we have to make sure farmers are able to invest long-term and do the right things going forward."
Milk contracts
On the upcoming dairy contract regulations, Mr Hutchison said he was fully supportive of the intent and the need for change and, while setting the milk price would always be difficult to manage, Muller was ‘pretty confident they would be compliant' when the legislation comes in.
On global markets, there was a positive outlook, with Mr Hutchison identifying opportunities in North Africa and southern Asia. He added Muller was also monitoring the non-dairy market closely to see if there was any more added value for the business but emphasised dairy was at the heart of Muller.
