June 14, 2011
UK farmers express frustration over milk prices
NFU Cymru's Milk Board members are unhappy and frustrated at the deficiency of upward movement in the prices of farmgate milk in spite of significant increase in commodity prices.
"It is hugely disappointing that milk buyers and processors have not responded to market opportunities," said board chairman, Maurice Jones.
"Commodity markets for cream, butter and powder have all risen, yet the UK farmgate price has not moved as it remains well below the average cost of production and not returning sufficient to allow for reinvestment.
"It does not make any sense. The UK farm-gate milk price in March stood at GBX26.5/litre (US$0.43) and has not really moved since then. But the market indicators for the returns from butter and skimmed milk powder give a milk price equivalent of GBX33.4/litre (US$0.54).
"Similarly, the indicator for milk used for cheese manufacturing stands at GBX32.8/litre (US$0.53) and the market for bulk cream has risen some GBP200/tonne (US$327) in the last six weeks.
"These are huge differences and processors need to be taking full advantage of these markets and returning this benefit to milk producers."
He said the NFU cost of milk production report earlier in the year calculated the average cost of milk production to be GBX29.1/litre (US$0.47).
"The situation is dire, with ever increasing input costs, instability and an overwhelming lack of confidence, and the consequences are very real with massive under investment, a high exit rate of producers and a shrinking national herd.
"The market indicators all point to immediate rises in the farm-gate price and we expect our milk buyers to deliver."