Milk prices at British dairy co-op First Milk are to increase further, with its B price increasing by 5ppl in August and its A price set to increase by up to 0.75ppl in August and 0.5ppl in September.
This will be the first time the shorter-term B milk price has tipped over 20ppl since the 1,200 supplier-co-op introduced the A and B pricing system in April 2015. In July, B milk increased by 2ppl and A milk increased by 0.5ppl, which put the price range for A milk at 15.84 to 17.39ppl across its four regional milk pools.
The A and B pricing is operated due to a range of contracts that the processor has with customers for dairy products. Each supplier is allocated a volume of milk for an A price, which is based on 80% of the average production for that month over the past two years. Any milk produced in addition to the A volumes is then paid the B price.
First Milk says that B prices reflect return from short-term dairy markets, such as curd and spot milk prices, whereas A prices are based on longer-term contracts, such as with Adams Foods and Nestlé. A milk prices are announced in advance, whereas First Milk states that the B price announced at this time is a forecast.
Significant improvements
The sharp rise in the B price for August reflects significant improvements in dairy markets in Britain on the back of a sharper than expected drop in milk supply. Production dropped off by 10.8% in the first two weeks in July in Britain compared with the same period in 2015, according to figures from the the Agriculture and Horticulture Development Board (AHDB).
Recent reports from the AHDB state that spot milk prices in Britain have been trading around 25 to 29ppl over the second half of July, with most in the industry stating that further increases are likely over the coming weeks. This means that the short-term spot prices in Britain have almost doubled in two months, from around 14 to 16ppl in May.
Source: FarmersJournall
Link: http://www.farmersjournal.ie/significant-price-increases-at-first-milk-in-britain-218069