March 6, 2023

UK dairy farmers feel brunt of another month of lower farmgate prices

UK dairy farmers face another month of significant farmgate price cuts as wholesale markets continue to fall and processors feel the pinch.

Many producers will receive about 7-10p/litre less in March than they would have at the start of the year. This will cause some farm businesses to make a loss, with industry cost-of-production estimates putting the average at about 43-45p/litre.

Additional milk supply continues to weigh on prices, with UK daily deliveries in February up more than 3% compared with the same month last year.

Both milk market indicators also fell again in February. The actual milk price equivalent (Ampe) dropped 5% to 33.5p/litre, and the milk for cheese value equivalent (MCVE) fell 11% to 39.5p/litre.

Michael Masters, head of milk supply at Barbers Cheesemakers, told Farmers Weekly that wholesale markets were falling fast.

He said milk prices rose by 15-16p/litre last year on the back of a 1.5% reduction in production, so it was little wonder that higher output this year – estimated at 3.8% above last year's levels – is having a significant effect now.

However, there were some signs of improvement, he added. "The fact that dairy futures have gained a couple of pence in the past month shows the market has stopped falling, which is fantastic news, as long as it can be built upon," he said.

Global dairy markets have been more varied, with wholesale values rising by 3.2% on February 7 before falling 1.5% at the latest fortnightly Global Dairy Trade event on February 21.

- Farmers Weekly