Extra pressure on dairy farmers ahead as farm gate milk prices could fall below 10p in spring flush

Some farm gate milk prices could fall below 10p per litre as the spring flush – when grass growth boosts dairy yields – takes effect, putting extra pressure on an already crisis-hit dairy sector.
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Leading dairy industry analyst Chris Walkland warned that production of milk in the UK was already up on last year and struggling to find a market that fully reflected the cost of production
He estimates at its peak in May this year Britain’s dairy farmers, many here in the South West, could be producing 45 million litres a day, some of which simply won’t find a buyer.
The so-called ‘spot-price’ for milk on the commodity market currently stands at 14p a litre. «That could go to 10p or 9p a litre,» Mr Walkland warned. Milk production tends to rise and fall with the seasons but already in 2016 daily deliveries of milk from farms to processors are running 4% up on the three year average – and spring has yet to arrive.
Milk that is not sold fresh or for cheese-making and other dairy products is dried for powder – but as production soars even the capacity to dry and store it could run out. «Some of it could be poured away,» Mr Walkland warned.
Farmers on the best contracts with supermarkets or processors should continue to be paid a fair return, with some on the best Tesco contracts currently receiving around 30p a litre. Four pints of milk retail at £1 or less in Tesco – around 44p a litre – which means the supermarket is hardly covering its costs on milk sales when processing, packaging and transport is taken into account.
The average farm gate price across the whole of the UK for all milk sold stood at 23.7p per litre in December 2015 with some farmers already receiving as little as 13p or 14p a litre – and that figure could plunge as more milk pours onto the market as the grass growth picks up and cows are turned out.
The gap between the best paid and worst paid dairy farmers has widened dramatically in recent months, forcing many farmers whose fixed-term contracts with processors are coming to an end to consider whether they can afford to continue milking. Costs of production mean selling milk below 25p per litre is barely viable for most.
Rob Harrison, NFU dairy board chairman who milks cows in Gloucestershire, said processors and retailers needed to have a «grown-up conversation» with farmers because there was a danger they could find themselves without enough suppliers if low prices force more to quit milking cows. But he admitted there was going to be «a lot of milk around in the next six months.»
The response of many farmers to the drop in the milk price, which fell 21% in 2014 and a further 24% in 2015, was to increase production. That, combined with rising milk yields in other parts of the world, the Russian ban on EU imports of cheese and the drop in Chinese demand for baby milk, created a glut.
Efforts to increase consumption of fresh milk and dairy products in the UK is seen by many as one of the answers to British dairy farmers’ difficulties. As a nation the UK is less than 80% self-sufficient in milk and there is scope to grow the market. There is also scope for more British exports of dairy produce.
The Agriculture and Horticulture Development Board that takes a levy from dairy farmers and oversees the industry – AHDB Dairy – is working on a new marketing campaign for milk alongside Dairy UK, the trade association for the British dairy supply chain.
And the NFU is bringing farmers together for a dairy forum at Stoneleigh Park in Warwickshire on March 15. Michael Oakes, NFU dairy board deputy chairman, said many farmers were at the end of their tether. «Part of the purpose of this forum is to make farmers’ realise they are not on their own,» he said.
NFU deputy president Minette Batters believes more could be made of the health benefits of drinking milk, especially with the fizzy drinks’ makers under fire for the amount of sugar in many of their products. And many farmers would like to see a greater take up by schools of the free milk that is provided for young children.
Under a government initiative all pre-school children who are under five and in day care are eligible for free milk under the nursery milk scheme. Other children may be eligible for milk subsidised by the school milk subsidy scheme. Schools, local authorities, suppliers or other organisations can claim the subsidy – but not all of them do.

Source: Western Daily Press
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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