A supermarket “battle of the bottle” means farmers continue to receive just a fraction of the milk price needed to break even – let alone make a profit.
Many producers are receiving just 60-70% of a break-even milk price of 28-30p per litre, said dairy analyst Chris Walkland.
Some farmers receiving a less than 16p/litre for milk, he added. “Getting from there to 28-30p is going to be a huge monumental challenge.”
Mr Walkland was speaking at a dairy summit convened to find a way forward following two years of farmgate milk price cuts.
This meant there was less money in the supply chain for farmers, said Mr Walkland.
All the major supermarkets followed suit with further cuts after Tesco slashed the price of four pints to £1 in March 2014.
“That has a significant effect on farmgate prices.
“I don’t buy into the idea that there is no connection between the retail price of milk and the farmgate price.
“As far as I am concerned, the more money there is at the top end of the supply chain, the more money has a chance of reaching the bottom.”
At the same time, UK milk production between April and mid-October 2015 had increased to 732m litres above the long-term average.
This was enough to fill an extra 25,000 tankers – enough lorries to stretch in a line all the way from London to Liverpool, said Mr Walkland.
“If everyone in the UK had to consume the amount of milk we have produced, based on a consumption of of 200 litres per person per year, we would need 7.5m people or a 12% increase in our population since April.”
Some 80 farmers and industry professionals gathered for a the dairy summit, which was held in London on Tuesday (3 November).
Organised by AgriHive, a group of UK farmers and dairy professionals, the goal was to identify fresh approaches to secure a future for UK dairy production.