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How the dairy industry is changing

schedule 6th November 2018 by Virtual College in Virtual College

How the dairy industry is changing

The dairy industry in the UK is a large one, with turnover in the tens of billions, and more than 70,000 people employed within it. It’s also key to the UK’s consumption habits, with the vast majority of British people consuming dairy products every single day. Here at Virtual College, we like to keep our finger on the pulse when it comes to the industries we work with. With that in mind, we’re going to take a look at some of the major themes that are going to impact the future of this industry.

Market

Perhaps the largest change facing the dairy industry is quite simply that demand is falling for many products, with milk in particular an issue. This is down to a number of reasons, several of which will be covered later in this article. Milk does of course take up a little over half of the entire dairy industry, so any effects on this product do have a much wider impact, and it’s generally the younger generations that are reducing their consumption.

Dairy farms are struggling, with reports in the last couple of years expressing concerns that the UK industry could be significantly reduced over the next 10 years. Much of the problem is with the price of milk. It is so low that dairy farms tend to make a loss on every litre. This means many, if not most farms, are in considerable debt. As many as 75% of those in Wales are in fact unprofitable for much of the year. Dairy farms will have to consider their operations and options carefully in the coming years if they are to remain in business.

This said, certain areas of the industry are doing well. Specialist cheeses have benefited from higher demand, and strong input (and demand) from other regions across Europe. Much like other products, artisanal cheeses and more interesting variants are doing fairly well. Brexit is however a large concern for the industry, as many of the UK’s premium dairy products are exported to the continent; supply chain management will be made considerably more difficult without an effective deal.

Diversification

The market challenges have of course driven many farms to figure out how they can do better, and how they can turn a profit when margins are particularly tight.

Lots of dairy farms have for example, opened their own ice cream parlours, which can be especially lucrative during the summer months. Significant added value can be brought, with many dairy farms even opening their doors for viewing, animal interaction and more. These kinds of expansions are in many cases akin to opening an entirely new business, and there’s a significant amount of effort needed to achieve this. Dozens of employees will need to be hired, which brings with it numerous challenges, ranging from staff management, to food hygiene training and more.

Similarly, manufacturers have increasingly looked towards more specialist products as previously mentioned.

Automation

Very few industries haven’t yet felt the effects of automation, and fewer still will avoid it entirely as technology progresses, and we move into what many commentators are calling an age of automation. Farming is perhaps one of the industries that’s seen to be less amenable to this development of technology, with traditional methods still in widespread use, but that can surely only last so long. Either way, automation has already come to the dairy industry, and we’re likely to see this continue.

The processes are ingenious. By combining a system of complex sensors and robotics, much of the milking process can be entirely automated. Cows are encouraged to enter a milking station with treats, the scanner checks to see if the cow has been milked recently, and then if not, robotic arms start the milking process. On farms where this has been trialled, the process has proven to be very effective, and the cows appear to prefer this method. It’s not just the milking process either; robots have been employed to move around pens dispensing food when needed, eliminating the need for a person to do the job.

Automation may be of concern to entry-level employees of larger farms, but those dairy farms that find they’re struggling with manpower when it comes to daily tasks will surely be attracted to this technology.

Similarly, in the manufacturing stage of dairy products, automation is allowing products to be made more efficiently than ever before. Raw dairy produce can be turned into consumer-ready products faster than ever through automation, and as the costs of development comes down, this is something that can be accessed by smaller manufacturers.

Climate change and sustainability

Sustainability has significant impacts in all areas of dairy production, from the rearing of cattle, to production machinery and to packaging.

It’s well known that cattle and other livestock farming alone is responsible for a significant amount of greenhouse gas emissions around the world, with estimates at around 10%. It’s slightly lower in the UK, thanks to our efficiencies, but it does reveal the issue that several percent of our greenhouse gas emissions come from the dairy industry. There must therefore be a commitment to bring this figure down. This is difficult without reducing the number of cattle and increasing efficiencies, but headway is being made through more environmentally friendly energy and water consumption.

In the UK, the dairy industry is in fact fairly effective in their sustainable packaging practices. The vast majority of packing materials are both made from recycled materials, and are recyclable themselves, which is well ahead of other industries. Part of this is down to the well-established habit of recycling plastic milk cartons among UK households. Nonetheless, the industry as a whole has committed to further improving on this to increase the use of recyclables. A reduction in waste sent to landfill is also a priority, and retailers in particular need to be at the forefront of this, both gauging and influencing customer habits.

Cattle welfare

This is the issue that’s perhaps having the largest impact on the decline of dairy consumption amongst younger age groups. Increasingly, the public are becoming aware of the significant animal welfare issues that come with dairy farming. Veganism is on the rise, but perhaps more importantly, the wider market, including vegetarians and those with no strict policy towards their consumption habits, are cutting down on their dairy intake. A number of fairly high profile documentaries and stories have been aired and published recently, which highlight some of the poor conditions that many dairy cows must endure throughout their lives, as well as the controversial practice of separating calves from their mothers at a very early stage. As a result, many brands are placing a focus on their welfare credentials where possible, which may mean there’s a gap in the market for smaller producers to go it alone rather than selling through a larger brand.

Conclusion

The dairy industry is at an interesting period of transition. The main producers, in the shape of farms, are struggling when it comes to the production of liquid milk, but there are options out there in the form of diversified product offerings, whether this is directly at the farm, or later on at the end product production stage. Food allergy awareness, and total veganism will certainly have their impacts, and we may well continue to see a decline in milk consumption as consumers look for alternative liquids such as almond and soy milk, but the industry can remain healthy if it embraces changing consumer tastes, and expectations when it comes to the environment and animal welfare.

Here at Virtual College we’re pleased to work with a large number of businesses in the food and drink sectors. Our training courses on food allergies and food hygiene may be of interest to businesses in the dairy industry, particularly those involved in the making of products for the end consumer, or those that may be thinking of branching out and diversifying their offering. Click here to find out more.

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Author: Virtual College

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