Concerns over the future of the region's dairy industry still exist, although the launch of a model milk contract by the National Farmers' Union has helped ease some of those worries for the time being.

The agricultural sector has been no stranger to media headlines over recent years, with slaughtered dairy herds and depressed prices often leaving a grey cloud hanging over its future.

High prices of fodder after a relatively small-sized harvest have also left farmers with worries over rising costs of production, perhaps in part to the flooding experienced by many parts of the UK last summer.

However, a model milk contract designed to promote greater fairness in the relationship between milk producers and purchases should help the industry move in the right direction, stimulating debate on a variety of important issues. These include:

• Whether there may be value for some producers in rolling term and fixed volume contracts that may allow producers to supply more than one buyer
• The fixing of milk price and price setting in the contract with variation processes that encourage proper negotiation
• Clarity on milk testing regimes, especially for antibiotics
• The extent of liabilities on the part of producers and their purchasers

An NFU South West spokesman said: "The price paid for milk continues to be a highly contentious issue, due partly to rapidly accelerating production costs, and, for many farmers, has been below what it costs them to produce for far too long,"

NFU South West spokesperson: "For a variety of reasons, the situation is complex, volatile and extremely difficult to resolve, but resolved it must be if we are to retain a domestic dairy industry, and this contract will provide model clauses which our dairy farming members should find extremely useful in their negotiations with milk buyers."

The UK dairy industry also received a welcome boost from supermarket chain Tesco in 2007, after they introduced their own milk label 'localchoice'. Luckily consumers seem to have seen the positive side, and have generally been prepared to pay a few more pence for milk which is produced regionally. Other supermarkets such as Sainsbury and Waitrose are also beginning to work with local farmers to improve their production methods.

However, the future of the dairy industry is anything but secure. With government plans to cut Defra spending recently announced, it will certainly be hard work to maintain the production of local dairy produce.

Predictions for 2008/2009 by the International Dairy Federation (IDF) suggest that that commodity prices will come back to their traditional position of being below those of consumer prices. This may initially seem like good news for milk producers, but given the huge increase in costs already incurred as a result of rocketing feed prices and further large increases in investment needed to meet environmental requirements, it remains to be seen if this will translate into a sustained increase in production.

Although many industry figures have urged the Government to have a radical rethink of its attitude to production agriculture, NFU President Peter Kendall has highlighted the fact that the industry's future is down to several groups of people working together.

Mr Kendall said: "I would not like to think that the future of agriculture is only the responsibility of government. We see the market as key in ensuring a profitable agricultural sector, and consumers and others in the supply chain need to play a key role in ensuring that the high standards and values of British produce are properly rewarded."