Dairy crash doubles best and worst milk price gap

The dairy crisis has doubled the divide between the best and worst milk prices, according to new figures.

Analysis from dairy consultants Kingshay shows the lowest-paid 10% of farmers received 21p/litre on average in March, while the top 10% received 32p/litre.

The 11.6p/litre divide has opened over 12 months of crashing returns for dairy producers.

In March 2014, the gap was just 5.6p/litre, with even the bottom 10% paid more than 30p/litre.

See also: ‘No crisis’ in dairy, claims EU farm chief

Now, dedicated supermarket contracts are still paying out more than 30p/litre, but some deals closely linked to commodity markets have tumbled below 20p/litre.

Defra’s average farmgate milk price has been criticised for hiding a big spread in prices.

In January, EU farm commissioner Phil Hogan was also attacked for claiming there was no dairy crisis, after he cited the average European price of 32 cents/litre (24p/litre).

Kingshay director Richard Simpson said the UK market was increasingly segmented and the industry needed to look beyond averages.

“While the gap may close whenever prices rise again, it is as likely it will widen again with any future falls,” he said.

Kingshay’s data represents actual prices paid to farmers with conventional Holstein Friesian herds, rather than headline contract values.

The big milk price divide will put many producers in a loss-making position, even though feed and fuel have become cheaper since 2014.

Latest cost of production figures from AHDB Dairy show a similarly broad range in efficiency.

The bottom 25% of producers had an average full cost of production of 36.2p/litre in the year to March. The top 25% had costs of 26.5p/litre.

The numbers include unpaid family labour, depreciation and a rent value on owner-occupied land.