The region's dairy farmers tightened their belts again last month as the milk price fell. Rob Simpson, of the National Farmers' Union examines the reasons behind the price slump, and Jessica Slee talks to a North Yorkshire farmer who is working towards a profitable future.

THE dairy industry has been beset by crises in recent years.

Foot-and-mouth disease led to the slaughter of one UK dairy herd in 20, and BSE resulted in the value of cattle plummeting by two-thirds overnight.

But what has had the most devastating effect on the industry is the price farmers have been receiving for their milk. Dairy farmers get just 8p at the farm gate for every pint they sell, whereas consumers pay an average of 36p.

The mark-up from farm gate to retail price is 350pc.

Almost three-quarters of dairy farmers have been driven out of the industry in the last 16 years by increases in bureaucracy, shrinking margins and a sustained low milk price, but their fortunes seemed to have turned last year.

Amid the heartache of foot-and-mouth, the milk price climbed to the point where farmers could actually make, a profit. Inevitably, it lasted for barely eight months, and producers have suffered a 10pc price cut in April.

Steve Willis is a tenant farmer near Harrogate who represents North Yorkshire dairy producers for the NFU. He owns 100 dairy cows and winces at the thought of another slump in prices.

A dairy farmer for just nine years, Mr Willis was a herd manager in Northumberland for 17 years before committing his savings and future to renting a farm. A few years after he bought his dairy herd, he watched in dismay as the value of his animals fell by two-thirds as a result of the BSE crisis.

The UK dairy industry's lack of profitability is a long and complicated story which began with the break-up of the Milk Marketing Board, the statutory body set up to stabilise the industry and which bought all UK milk.

Since its demise, Government policy has meant that milk producers have had a particularly weak position in the marketplace and, as much of the added-value dairy produce such as cheese and yoghurt, is easily traded within Europe, dairy producers in Britain have been at the mercy of a strong pound since the mid-Nineties.

"Dairy producers have suffered in the long term from the break up of the MMB," said Mr Willis. "We have been left at a disadvantage when dealing with the powerful retailers and processors.

"What we need now is a rationalisation of the milk marketing groups so they can compete with the powerful groups in Europe, and in the global market."

Mr Willis has joined other local dairy producers to negotiate better prices for the farm inputs. The co-operative buying group allows its members to benefit from paying lower prices for animal feed, fuel and fertilisers.

The future is uncertain, yet Mr Willis is adamant that he will not give up the way of life he loves.

"When we look at how so many smaller family farms in France and Germany can thrive, one key difference is their willingness to co-operate with one another," he said. "Farmers in this country have to co-operate in the purchasing and marketing side if they want to survive. UK farmers are not good at working together, but this is the only way the industry can hope to succeed."