The UK dairy industry of the future will see fewer and larger producers making more of the nation's milk, a report has claimed.

Some 13% of farmers planned to leave the industry within two years, up from 8% a year ago, according to DairyCo's Farmer Intention's survey. This would hasten the process of larger producers supplying more contracts, the report said. "The structure of the British dairy industry will continue to evolve with fewer, larger dairy farms providing an increasing proportion of the nation's milk supply."

Farm survival was directly linked to investment and farms intending to invest over £100,000 in the next five years were more than seven times as likely to still be running in 10 years than those investing less than £25,000, DairyCo said.

However, even large players' production increases would not prevent UK milk supply falling 5.2% to 12.2 billion litres by 2010/11.