THE FUTURE of the Scottish dairy industry could rest with a 25 point action plan launched yesterday by rural affairs secretary Richard Lochhead.

One of the key elements will be ensuring the viablity of farmer-owned co-operative First Milk, which has run into problems in recent months and been forced to delay monthly milk cheque payments to its members.

To launch the plan which aims to improve the resilience of the sector to the onslaught of volatile market prices, Mr Lochhead met with dairy farmers William and James Taylor, and their father William snr, at Baldoukie Farm near Tannadice, Angus.

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Mr Lochhead said: "The dairy sector is vital to Scotland's farming and food industry, and the wider rural economy. We have 900 dairy farms, with 2000 processing employees, which generate well over £400 million of output - that's 15 per cent of our total farming productivity. This sector's future is of real importance to Scotland.

"Scotland has a powerful brand - both at home and abroad - in its food and drink offering and the dairy sector is at the core of that. I look forward to putting today's plan into action and working with all our partners on its successful delivery.

"We want to grasp the opportunity that the domestic market offers for our high-value products as well as accessing the lucrative overseas markets," he continued. "I hope that the Scottish dairy plan will put the dairy sector on the same platform as Scotch beef, salmon and whisky, delivering long-term sustainability and helping to shield it from global volatility."

The plan takes into account recommendations made by the Scottish Parliament's rural affairs, climate change and environment committee following its own enquiry into the Scottish dairy industry.

It set out five main themes - market development; promoting best practice in dairy farming; promoting a transparent and efficient supply chain; supporting First Milk in transforming its operation in Scotland; and ensuring international rules are correct.

With regard to First Milk, the plan highlights the need to secure a thriving future for the co-op, which will require actions both internally, and by several other players in the chain working together with the co-op to ensure streamlined and effective public sector support for plans to transform the business.

This will include implementation of an eight point strategy, providing support for First Milk's revised capital investment plans in its Campbeltown creamery, and integrating products into the development of the Scottish dairy brand due to be launched in October.

The plan also promises to ensure that the ongoing comprehensive review of freight fares across Scotland's ferry network takes account of the impact on dairy transport costs. Cheaper freight charges would greatly benefit producers on the islands of Bute, Arran and Gigha.

- For in-depth news and views on Scottish agriculture, see this Friday's issue of The Scottish Farmer or visit www.thescottishfarmer.co.uk