Britain’s dairy farmers are being forced to think seriously about their future due to concerns over insufficient returns, volatile markets and the scale of on-farm investment, a new NFU survey shows.

The survey of nearly 600 dairy farmers, including those in the South West, reveals 9 per cent of producers believe they are likely to stop producing milk by 2025 – up from 7 per cent last year. A further 23 per cent said they were "unsure" if their business would continue producing milk beyond 2025.

87 per cent of dairy farmers who responded said they are concerned about the impact of government regulation, with feed prices , energy prices  and cash flow and profitability  other key factors that would curtail milk supplies.

Meanwhile, 91 per cent of dairy farmers said the main factor to them increasing milk production would be the scale of investment needed for things such as suitable slurry storage to ensure their farms are compliant - this supports the NFU call for Defra’s Surry Infrastructure Grant to be extended to cover more areas and to lower the minimum spend threshold needed to access the funding.

NFU South West regional dairy board chair Stephen Dark, who farms in Cornwall and represents farmers across the region, said: “Obviously dairy farmers are concerned at present because of the current low milk price with many receiving less than the cost of production.

“With the majority needing to invest in infrastructure to comply with current slurry and the forthcoming air quality regulations, an improvement in returns is essential for farmers to have the confidence to commit.

“The dairy processors and retailers need to be careful not to squeeze the industry too far because a consequence of the price being too low for a considerable period of time will see their milk pools diminish. This can be seen in the results of the survey as potentially up to 31 per cent could quit production within the next two to three years.”

NFU dairy board chair Michael Oakes said: “It’s clear that significant inflationary pressures combined with below cost of production prices are continuing to put the resilience of British dairy farming businesses under threat. We are now facing a crisis of confidence among Britain’s dairy farmers.

“The results of this survey show that, now more than ever, we need resilient and collaborative dairy supply chains. It’s vital we reverse this trend of boom or bust and invest in our supply chains. New industry-wide regulation on contracts, expected to be introduced later this year, must support fairer, more transparent and accountable supply chains. But regulation isn’t a silver bullet.

“With increasing global demand for British dairy, we know that the long-term future is bright for our sector. To ensure we maximise this potential, it’s imperative that government continues to work with us to ensure we have the right environmental, regulatory and trade framework in place to support the production of high quality, nutritious and sustainable food.”