Despite soaring costs of production, dairy farmers enjoyed record breaking profits in 2022, that are about to be hit by yet more challenges as the cost of living crisis bites deeper throughout the UK and Europe.

That was the overwhelming viewpoint of most of the speakers attending a packed out Semex Conference in Glasgow, on Monday, who claimed that while 2022 was one of the most challenging, 2023 is likely to remain just as difficult if not more so, due to continued volatile markets and a continued shortage of labour.

"These are very defining times for dairy with consumers changing their eating habits due to the cost of living crisis," said Peter Giørtz-Carlsen, chief executive of Arla Foods.

"We know that 75% of the British population have reduced their expenditure on food with some people even having to skip meals. There are also signs of the food service sector slowing down."

Despite these statistics and the continued challenges from the war in Ukraine and increased costs of production, he said there is huge potential for milk producers when the demand for dairy is growing 2% per year globally, most of which is driven by consumers in Asia.

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Furthermore, he added that with one in four farmers in the UK supplying Arla, which equates to 3.8bn litres of raw milk per year, the farmer-owned co-operative is looking to increase exports.

"Dairy has always been seen as an affordable source of nutrition and we have a huge role in providing that from the UK's temperate climate, through increased exports. We have to be more vocal as a nation to highlight the nutritional content of dairy which should be regarded as a 'superfood.' The UK is not even self sufficient in dairy and is still a net importer."

Nicholas Saphir, chairperson of AHDB, also highlighted the need to bolster production.

"We need to look at being self sufficient in dairy as the reality is, the British market is now the 12th biggest dairy producer globally and the 11th highest exporter of cheese, yet our average milk price is constantly below that of New Zealand, France, Germany and Ireland. Only the US has lower milk prices than Britain.

"The last 18 months saw improved milk prices due to the global drop in production, but prices look to be falling again and dairy farming is facing a new challenge going into the spring when there is global growth for dairy. We need to give our farmers confidence in the sector," said Mr Saphir, highlighting that the demand for alternative dairy products remains static at 6% of the total market.