ENGLISH dairy farmers do have a bright future, but getting there will be tough - those who are struggling to make a profit now, or who think they may struggle in the future, must consider their options.

A joint Milk Development Council/NFU meeting in Hexham was told that marketing and adding value would be the keys to success.

Ken Boyns, MDC market analyst, said there was a definite future for the best dairy farmers, but MDC research had concluded that those who were struggling now, or who thought they would under CAP reform, should consider four main options.

They could increase profits; increase efficiency; look at alternative sourced of income - or cease milk production.

Mr Boyns said that, four weeks ago, the MDC asked 500 dairy farmers across the UK what they expected to be doing in the next few years and almost a quarter (23pc) planned to leave the sector in the next two years. They were producers with an average of 86 cows.

More than a third (38pc), with 117 cows, expected to stay the same, while 18pc, with 144 cows, planned to expand.

Mr Boyns said the milk price could fall by 9pc over the next two years. It was a lot and created an important problem. "If production follows, there will be positive results on prices and it will be very important to get into decent contracts with processors," he said.

The reality was that production would fall slightly over the next two years, which would help those still in business by taking pressure off milk prices. "There will be pressure but there will also be opportunities," said Mr Boyns, "There is no doubt the job is to spot them and take advantage of them."

He said the UK had 60m consumers and there was a huge European market.

Adding value would not be an instant success but would be well worthwhile. It had taken Arla six or seven years to turn Cravendale into the success it was today.

Mr Boyns showed what could be achieved by taking a polybottle of milk worth 42p a litre: adding a flavour increased the value to 83ppl; a brand saw it rise to £1.20 and by adding friendly bacteria the value shot up to £3.48.

"At the moment it is going to Danish and Scandinavian milk producers but we could do it, not tomorrow, but we could do it," he said.

Mr Boyns said the MDC spent £4m of levy payers' money a year on marketing which was match-funded by industry. Some of that had been spent on setting up milk bars and fridges in schools to boost consumption and capture future customers.

Flavoured milk had also proved popular with van drivers and Mr Boyns suggested bottles could be fitted with an easy-flow top like water to make them easier to use.

There was also a huge potential for UK producers in the cheese market.

"There is definitely a profitable future in dairy farming but it will be tough getting there," he said.

Producers should talk to their local milk buyer and fully understand the market requirements of their milk. "Your buyer is a very big determinator of what your price is likely to be in the future," said Mr Boyns, "You must have a plan, decide where you want to go, and get there."

Louise Cole of the NFU said intensive dairy farms would see a severe drop in payments, but all milk producers would be affected by the CAP reforms. Producers needed to look at how income could be obtained through other schemes.

"But it is not all doom and gloom," she said, "There is a lot the industry can do. It will take time but we do think it can move forward."

* Independent dairy specialists at the Kingshay Farming Trust have warned against "doom and gloom merchants" who claim future milk prices could fall by 13ppl because they assume prices will follow the intervention milk price equivalent.

"There are many more factors influencing milk prices within the wider perspective of the milk market," said Duncan Forbes, Kingshay managing director. "Understanding these factors is vital to formulating your plan for the future."

Every farm needed to make a positive decision on the way forward. Some might increase output while others might quit milk production. "But make sure you are making that choice based on a full understanding of the facts, not on a couple of gloomy forecasts of the future milk price," said Mr Forbes.

It was vital that producers knew their full costs of production and were in control of them.