January 15, 2024

 

UK milk deliveries show slight dip in December amid challenging conditions

In December, milk deliveries in the United Kingdom reached a total of 1,021 million litres, marking a modest decrease of 0.4% (3.5 million litres) compared to the same period last year, UK Agriculture and Horticulture Development Board reported.

 

The daily average deliveries stood at 32.9 million litres. Despite this decline, the year-to-date milk season production, spanning from April to December, reached 9,272 million litres, only marginally trailing behind (-0.5%) the corresponding point in 2022.

 

The recent trend in Q4 deliveries had been one of notable decline, particularly evident in November with a 3% year-on-year decrease. Forecasts had anticipated a continuation of this trend, estimating a 3.4% decline for December. However, the latest figures reveal a less pronounced slowdown than expected.

 

While production levels may appear like the previous year, the weather conditions in December 2023 differed significantly. Unlike the deep cold snap experienced in December 2022, the weather in December 2023 was milder, with above-average temperatures across the UK, excluding Northern Scotland. This contrast in weather conditions contributes to the apparent deviation in production figures.

 

Dairy farmers faced ongoing challenges in December as input costs remained high, with a notable increase of GBP 20/tonne (US$2547) year-on-year for big square baled straw, coupled with pressure from relatively lower farmgate milk prices. The year 2023 proved challenging for many farmers, with some exiting the sector due to tight margins, and industry estimates suggesting operations below the cost of production.

 

Despite the challenging circumstances, some farmers appear to be prioritising cash flow through milk cheques, potentially moderating the decline in production. Several factors contribute to this dynamic, including the preparation for high business expenses in early 2024, leading farmers to seek increased production volumes despite weaker prices.

 

An additional factor supporting December's milk production could be the rise in autumn calving herds, encouraged by processors. Late autumn calving herds typically peak production at the beginning of winter, contributing to higher delivery volumes during this period.

 

The quality of silage may also influence production levels, with reports indicating poor silage quality in 2023. However, supplementation with the previous year's crop could be boosting milk volumes in December.

 

Similar trends of increased production in December have been observed in Europe, with France and Germany reporting comparable patterns. According to StoneX reports, volumes in France and Germany showed year-on-year increases between 0.7% and 1.8% and 0.7% and 1.1%, respectively, for the period ending on 24th December.

 

-       UK Agriculture and Horticulture Development Board