THE Milk Forum, which represents the three Scottish milk co-operatives and dairy companies which source supplies directly from producers, has compiled figures which demonstrate the pressures being faced by the industry.

Analysis shows that prices at auction for premium dairy cows and heifers have dropped by more than 40% in the past five years, with no sign that the decline is levelling off.

Jack Pirie, managing director of Scottish Milk and spokesman for the forum, said part of the decline was due to the effects of BSE and the fact that cull cows at the end of their working life had to be disposed of through the over-30-months scheme at a fraction of their previous value.

The fall in the value of animals was an additional pressure on top of the loss of income stemming from the fall in milk prices.

''It undermines the value of a farmer's herd, which in turn affects the security covering overdrafts at the bank.''

The Milk Forum analysed average prices paid for premium cows and heifers at auction at Ayr over the past five years. Prices for heifers peaked at an average of #1110 in April 1994 and cows were at their highest in May of that year at #973.

In February of this year heifers were averaging #487 and cows #497. ''Farmers who have invested sensibly to meet quality standards required of them by consumers are now being constrained from moving forward and many of them are questioning the viability of their dairy operations,'' said Pirie.

''The case for agri-monetary relief is growing day by day and it is good to see emphasis now being placed on the plight of the dairy farmer in Scotland. It is surely now time for the Scottish Office to take notice of the situation dairy farmers find themselves in.''