According to DairyCo, UK farmgate milk prices reached a record high of 30.77ppl in June.
The continued imbalance between demand and available supply, both within the UK and globally, has meant that the upward trend in milk prices has been maintained. The average June price was 0.81ppl above the May price of 29.96ppl, due to a combination of announced price increases taking effect and lower seasonal deductions which are typically applied in the peak production months of April – June.
However, once prices have been adjusted by the Retail Price Index to take out the influence of average UK inflation, the June milk price (in real terms) is similar to that seen 20 years ago in June 1992. In fact, current prices are lower than when prices spiked in 1995/96.
It is noteworthy that although actual prices are the highest on record, in real terms they are lower, which may explain why many farmers feel under pressure despite the current high price level.
Meanwhile, concerns over contaminated Fonterra dairy products have the potential to impact world trade flows, depending on how the situation is resolved.
Fonterra recently reported contamination to one of its specialist wheyprotein concentrate products by a strain of the toxin ‘clostridium’ that can cause severe food poisoning (botulism). According to a statement issued at the end of last week the New Zealand (NZ) government has confirmed that no other NZ dairy products are affected.
In response to the contamination, China (among other importing nations) has temporarily suspended imports of whey powder and dairy base powders used for food manufacture. In addition, it has implemented additional inspections for all NZ dairy products and indicated that extra testing may be required.
New Zealand’s dairy industry accounts for approximately 35% of world trade in dairy products, and in 2012 it exported 1,261 thousand tonnes of WMP and 390 thousand tonnes of SMP. For these products, China is its most important export market, taking in around 31% and 25% respectively of NZ’s WMP and SMP production in 2012. Equally, powders from NZ are vital to meeting China’s growing demand for dairy products. In 2012, China imported 406 thousand tonnes of WMP and 168 thousand tonnes of SMP, of which 96% and 60% respectively were sourced from NZ.
A DairyCo spokesperson said: “The biggest determinant of how this crisis could impact world trade flows will be its impact on consumer confidence in China. With the high priority that Chinese consumers put on food safety – especially for dairy products after the 2008 melamine crisis – a loss of trust in products sourced from New Zealand could have considerable impacts. However, if Fonterra are able to deal effectively with the issue, and relieve consumer concerns quickly, then the likely scenario is that there will only be a short-term impact.â€
Source: Farming Life
It is noteworthy that although actual prices are the highest on record, in real terms they are lower, which may explain why many farmers feel under pressure despite the current high price level.
Meanwhile, concerns over contaminated Fonterra dairy products have the potential to impact world trade flows, depending on how the situation is resolved.
Fonterra recently reported contamination to one of its specialist wheyprotein concentrate products by a strain of the toxin ‘clostridium’ that can cause severe food poisoning (botulism). According to a statement issued at the end of last week the New Zealand (NZ) government has confirmed that no other NZ dairy products are affected.
In response to the contamination, China (among other importing nations) has temporarily suspended imports of whey powder and dairy base powders used for food manufacture. In addition, it has implemented additional inspections for all NZ dairy products and indicated that extra testing may be required.
New Zealand’s dairy industry accounts for approximately 35% of world trade in dairy products, and in 2012 it exported 1,261 thousand tonnes of WMP and 390 thousand tonnes of SMP. For these products, China is its most important export market, taking in around 31% and 25% respectively of NZ’s WMP and SMP production in 2012. Equally, powders from NZ are vital to meeting China’s growing demand for dairy products. In 2012, China imported 406 thousand tonnes of WMP and 168 thousand tonnes of SMP, of which 96% and 60% respectively were sourced from NZ.
A DairyCo spokesperson said: “The biggest determinant of how this crisis could impact world trade flows will be its impact on consumer confidence in China. With the high priority that Chinese consumers put on food safety – especially for dairy products after the 2008 melamine crisis – a loss of trust in products sourced from New Zealand could have considerable impacts. However, if Fonterra are able to deal effectively with the issue, and relieve consumer concerns quickly, then the likely scenario is that there will only be a short-term impact.â€
Source: Farming Life
