Dairy farmers suffering rock-bottom milk prices must look inwards at their own businesses this year, an analyst has warned.
The Dairy Group’s Nick Holt Martyn said farmers could do little to buck market conditions, with world prices now scraping along the bottom.
His firm’s market price equivalent (MPE), a weighted indicator of wholesale values after processing costs, has dropped 0.8p/litre on the month to 27.6p/litre.
Liquid and cheese returns are holding up better than powder prices, but the MPE is still down 5.64p/litre on the year.
Mr Holt-Martyn said individual dairy farmers could do nothing about external issues and should think first about targeting low-yielding groups with intensive grazing and much less concentrate.
“The point of economic optimum for a business is being shifted back with each fall in milk price and farmers will need to know what their cost of production is to adjust their system to their milk prices,” he said.
“This will be the year to make the feeder wagon redundant for the summer, join a feed-buying group and feed low-protein cake at grass – now that will be a challenge.”
The MPE has fallen further because of the end of Christmastime demand.
Gaps between products have widened, with a range of 10p/litre between cheese and butter values, and skim milk powder, which has hit its lowest level the summer of 2009.
Internationally, the latest Global Dairy Trade auction rose by the equivalent of 0.3p/litre – but only to 17p/litre.
Mr Holt-Martyn added that with world milk supplies still growing about 4% on the year and EU quotas ending in the spring, markets were unlikely to improve until the autumn or winter.
“The truth is that the future looks and behaves much like the past only with a lot more milk in it,” he said.
“With the GDT bumping along the bottom for the past three months at 17p/litre equivalent, we can only hope that the UK price won’t fall any lower.”