text: The Welsh dairy sector is more confident than it has been for years – but it must now capitalise on current prices to build for the future, according to a new report.
  Produced on behalf of DairyCo, the Promar report is a healthcheck of the Welsh milk processing industry.
  It found less raw Welsh milk is being exported to England for processing, pointing to a growing demand for local milk.
  Conversely, export sales are building for Welsh dairy products and this is seen as a prime avenue for further expansion.
  In the past three years, since the last Promar report, competition for milk in Wales has “increased significantly”, with most Wales-based processors expecting to need more milk in the future.
  The same applies to liquid milk processors based across the border – but these are unlikely to invest in Wales.
  For example, Muller Wiseman believes its three processing facilities in England are capable of handling more milk from South, Mid and North Wales.
  Delyth Davies, head of Dairy Development Wales, said: “This study was completed against the backdrop of relatively high international prices for dairy products.
  “This underlying positive environment has no doubt contributed to the optimism of the overall industry.”
  Not everything is rosy, however. Over the past three years the Welsh processing sector has seen significant change, with the loss of some processors, such as Dairy Crest and Saputo, and the emergence of others, including Volac in Felinfach, and Tomlinsons in Wrexham.
  Two “gaps” remain in the Welsh processing mix, the report identified – a truly large-scale liquid milk processor and milk powder processing capability.
  Given the distance from consumer markets, milk powder processing is the more viable option, said Promar.
  At present, only one processor in Wales describes its facility as being “state-of-the- art” or “world class”.
  But over the next three years 85% of Welsh processors are planning further investment, mainly on improving efficiencies and increasing production capacity.
  Sustainability is seen as crucial, including more efficient water and energy use.
  This must be extended through the whole supply chain, from farm to customer, with an increased focus on milk production from forage, said Promar.