December 20, 2011

October farmgate milk prices hit record levels in UK

The figures released by UK farming ministry Defra indicated that average farmgate milk prices hit record levels in October.

It said GBP0.29 (US$0.45) a litre was the norm over the month. That was up 3.2% on September and 12.4% higher than October last year.

The main reason for the increase lies with contract price rises put through by various processors at the start of the month.

Milk levy board DairyCo said that, of the 40 contracts it tracked, 33 recorded increases.

Several deals depended, however, on producers meeting new demands for lower bactoscan and somatic cell counts. Robert Wiseman Dairies heralded a GBP0.0185 (US$0.03) a litre rise in September, but dairy farmers supplying it had to comply with the new terms, or face penalties.

DairyCo said: "With some further increases being made in November, it is likely that the farmgate price will increase slightly again and may reach GBP0.30 (US$0.47) a litre. However, this must be balanced against input costs which, while easing in recent months, were substantially up on 2010 for most of this year."

NFU Scotland has, meanwhile, renewed calls on processors to retain current ex-farm rates and to look at passing back further increases to producers in the New Year.

Union milk policy manager George Jamieson said: "It is a huge disappointment that some liquid milk processors are looking to use a slight weakening in global and UK commodity values as justification for talking down the milk price."

Jamieson said there were signs of international markets stabilising, with the recent Fonterra auction in New Zealand showing improvements. British milk powder and cheddar prices were stable. While butter and cream prices had fallen, they remained at levels substantially above those seen 18 months ago.