The paper examines the changes in yields and dairy cow numbers in recent years and considers the likely economic prospects for investment in modern dairy units. With full Community prices applied in the UK at a realistic rate of exchange, dairying would be very profitable. In spite of the setback between 1973 and 1975 the milk output objective of the Government's White Paper ‘Food from Our Own Resources' should be reached in the first half of the 1980s. Liquid milk consumption will be fairly stable in the future, but with the higher prices under the Community régime the butter market will contract. A modest increase in cheese consumption will continue. Higher milk production in the UK and a reduced market will increase self‐sufficiency. In spite of the European surplus in the dairy sector the competitive strength of the UK industry at Community prices is substantial and it is economically right for it to ex
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