The dairy industry has rallied to the aid of the beleaguered Nocton Dairies megadairy, warning the council handling the planning application that if it rejects the scheme the future of the whole UK dairy sector could be in jeopardy.

Last Friday, industry body Dairy UK urged North Kesteven District Council to approve the application. Nocton was a "test case over the development of the UK dairy industry", Dairy UK said, and if it were not approved it would send "a significant signal" to anyone else considering investing in the industry.

The increasingly globalised nature of commodities markets meant UK dairy farmers needed to be able to compete with the rest of the world in order to remain economically sustainable, it argued. The cost efficiencies offered by large-scale farming units such as Nocton were an important part of that, it added.

"Ultimately, it will be the consumer driving acceptance of these units," said Dairy UK director-general Jim Begg. "But we can't be denied this option in our repertoire of systems."

Support for large-scale farming in the UK is also coming from other quarters. This week, consultancy Promar International ­responded to the Future of Food and Farming report by warning that such farming units were "in danger of ­being demonised" before they got under way.

"If we are serious about feeding a world of nine billion, some of these farms need to be bigger than we typically see at present," MD Andrew Thompson said.

Nocton Dairies has suffered a number of setbacks since first applying to build an 8,100-cow dairy in early 2010. Most recently, the Environment Agency submitted a critical document to North Kesteven District Council, claiming aspects of the development could pose an "unacceptable risk" to the environment.

There has also been strong opposition from environmental and animal welfare groups as well as a number of local residents.

None of the UK's supermarkets or dairy processors has to date come out in support of Nocton.

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