Prices for milk and lamb have dropped to such a low level that farmers have resorted to demonstrations. The reasons for the price drops are mainly down to oversupply, the strength of sterling in relation to the euro, and the Russian ban on food imports from the EU.

Sadly, prices won't fully recover for UK farmers until supply and demand get back into balance, and the euro strengthens enough to allow normal exports to the rest of the EU to resume.

Some dairy farmers, such as those who borrowed too much to expand or the inefficient, will undoubtedly go out of business in the next year or so - but that's market forces at work. At the end of it all, the world will still have an adequate supply of milk, but it will be produced more efficiently from bigger dairy herds of high-yielding cows. That's how capitalism works.

Supermarket Morrisons headline-grabbing announcement that it is to launch a new milk brand where ten pence per litre of the retail price will go directly to dairy farmers will do little to help. It will give consumers a blunt and uninformed choice of higher-priced, farmer-branded milk sitting side-by-side with Morrisons own-label milk that is still being offered at loss-leading prices. That will test the loyalty of consumers working to tight family budgets.

It's much the same situation with lamb that is currently fetching prices at its lowest level at this time of year - peak season- since 2009. That prompted a "no-lamb" week where some withheld lambs from the market in a forlorn protest that few noticed.

As usual, one of the man gripes is that last year farmers received 58 per cent of the price that the consumer pays, while this year they only receive on average 44 per cent. That's a very simplistic argument because farmers never publicise when high prices are squeezing butchers' margins.

While farmers regularly complain that they aren't paid enough for their prime lambs, butchers for their part complain about lamb carcases being too fat and having too much waste.

When a lamb carcase is butchered it yields around 40 - 45 per cent of prime cuts, 15 per cent of trim and the remainder - bones and waste - is in the region of 40 per cent.

Put simply, a lamb that weighed 40kg when it was alive on the farm, will probably yield a carcase weighing about 18kg in the abattoir, that will eventually yield between 7.5 and 8kg of prime cuts for the butcher to sell. After the butcher factors in his costs it's little wonder that lamb is so expensive.

The reality is that, with the exception of some ethnic communities, lamb consumption is declining. UK consumers eat about 300,000 tonnes of sheep-meat per year, or somewhere between 4.7 and 5kg per person/annum. That average conceals the fact that we Scots only consume about 3kg, less than half of that of the average in England. Lamb is going out of favour because it is perceived as being expensive and time-consuming to cook. I am all for lamb promotions, as we have to try something to win consumers back, but I doubt their long-term effectiveness.

The number of breeding ewes in Scotland peaked at about 4m in the early 1990s, but that number fell to just over 3m last year. Foot-and-mouth in 2001 saw the start of the serious decline in sheep numbers, that accelerated when subsidies were decoupled from production in 2005 under CAP (Common Agricultural Policy) reforms. That allowed "slipper farmers" to claim generous subsidies without keeping sheep, and concentrate on improving deer-stalking.

The reality we face today is that most hill flocks struggle to be profitable in the absence of subsidies.

There is now a strong argument for removing more sheep from our hills and uplands and replacing them with trees. The Scottish Government has set an ambitious of increasing the current area of 17 per cent of Scotland under trees to 25 per cent. That has been widely welcomed by environmentalists who have a similar agenda of using trees to capture carbon from the atmosphere, to enhance the environment, its biodiversity and the landscape, as well as increase economic opportunities for processing and marketing timber products.

The more that I think about, the more I realise that such aspirations are achievable, and that livestock farming can co-exist with commercial forestry on the scale envisaged by the Scottish Government.