Have dairy price increases reached their peak? – Join the debate

Dairy farmers looking for 30p/litre by Christmas could be disappointed, according to one independent industry consultant.

Mike Bessey said told Farmers Weekly he thought the current run of price increases had probably reached its peak.

Farm-gate prices have been spiralled upwards since the summer with Marks & Spencer announcing an industry-leading 28p/litre last week.

Tesco, the UK’s largest food retailer, is now paying 27.5p/litre.

Mr Bessey, however, said world commodity markets, particularly whey, were starting to fall back from recent highs.

Cheese was still strengthening, he said, but this was probably a case of it catching up with the rest of the market.

There could still be some room for small increases from some buyers, Mr Bessey reckoned, but farmers had already seen the biggest rises.

“I’m not saying this is doom and gloom, “said Mr Bessey. “Prices will never go back to where they were, but I think if you’re looking for the top of the market we’re already there. However, that still leaves the potential for farmers to have a milk price in the mid 20s.”

The NFU’s Tom Hind agreed that commodity values had peaked, but he said there was no evidence markets were going to fall back substantially and farm-gate milk prices should be higher. “There is still a gap between realisations from commodity markets and raw milk prices.”

Writing on the forums, Ed the Duck said: “Feed prices have rocketed and with the government reviewing the NVZ rules most if not all of this money is going to leach out of our bank accounts. So are the higher prices going to be of any use to us or are things about to get tougher. I for one am not optimistic about our future.”

But tarquin called for a more positive tone: “I reckon we should give more space to talking the price up rather than talking it down. Have milk prices reached their peak? I would answer,  has UK production reached the required level?”

Do you agree that milk prices have peaked or do you reckon the market still has more to offer? Have your say on the forums.