Report Synopsis

Profitable Dairy Farming in Scotland

Robert Gray

As a young farmer who had recently bought a greenfield site in the middle of Scotland and was developing it into a New Zealand-style dairy farm, I was frustrated in particular by the shortage of dairy processors in Scotland. This meant there was little competition to buy the milk I was producing, and lack of alternatives is never healthy for any industry.

The market for product was clearly there: the UK has the second largest dairy deficit in the world. But there was apathy among farmers which I attributed to the government’s subsidy system and taxation policy. The labour situation was difficult as young people did not consider that dairying offered them an attractive career option.

On the other hand Scotland offers perhaps surprisingly many natural advantages for dairy farming. The temperatures are such that the growing season for grass is in excess of 200 days a year for most of the country. Soil pH levels are in the 6 range, ideal for grass growing. Crucially rainfall averages 1,000+ mm a year. Scotland enjoys one great advantage over England and Wales in that so far it is clear of bovine TB. Land prices are comparatively low against many other countries in the world which can grow similar tons of dry matter per hectare.

To study “Profitable dairy farming in Scotland” I took advantage of my Nuffield Farming Scholarship to visit Ireland, Chile, Uruguay and – to see a completely contrasting system of dairying – Qatar. At an earlier stage in my life I had spent 7 years living and working in New Zealand so I was already very familiar with, and impressed by, the dairy farming in that country.

Today all milk, in almost any country, destined for anything other than supermarket direct supply contracts has to be produced at world price. The world price setter is New Zealand, which has developed a simple but highly efficient no-frills system based on spring block calving, maximum production off grass, low labour requirement and minimal capital expenditure. This system has since been copied successfully in many other countries which have expanded rapidly into the world milk market. Labour issues have largely been solved by developing a sophisticated sharemilker contract scheme with many variations that the junior partner can offer in exchange for an agreed share of the total milk cheque. It all helps to create a motivated workforce and shared values.

I have returned from my study tour convinced that a viable dairy industry, based on the NZ system, is both entirely possible and highly desirable for Scotland. But there are two issues which must be put right by those who steer our industry: more processing facility must be constructed to enable us to sell, promote and potentially export Scottish branded produce; and labour issues must be addressed by the introduction of a sharemilker contract scheme.

In addition, Government should (and almost certainly will) overhaul both the subsidy and inheritance tax systems.

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