Market forces justify milk price rises, says NFU

Global market indicators point to a farmgate milk price rise for farmers, rather than a price drop, according to the NFU.

The warning comes amid concerns that a price drop of up to 2p/litre could be on the cards for some cheese producers.

The union has said dairy farmers expect milk buyers to seek markets that maximise the value of milk and dairy products, in order to secure future supplies.

NFU dairy board chairman Mansel Raymond said buyers who failed to deliver risked losing supply.

“There is an insatiable and growing demand for dairy products globally. The GDT/Fonterra auction alone has seen values of dairy commodities rise by almost 40% since early March,” he said.

“Nearer to home, European auctions have seen Gouda and Emmenthal values climbing and the UK dairy indicators AMPE (actual milk price equivalent) and MCVE (milk for cheese value equivalent (MCVE) have reached 32.4p/litre and 33.0p/litre respectively for March, up 34% and 5% on the year.

“In fact, we estimate that recent cream valuations would put AMPE above 35p/litre today. So there is only one way in which the price of milk should go – and that is up.”
Mansel Raymond, NFU dairy board chairman

“In fact, we estimate that recent cream valuations would put AMPE above 35p/litre today. So there is only one way in which the price of milk should go – and that is up.”

Mr Mansel said farmers were emerging from one of the hardest farming years in decades.

Recent industry estimates put feed cost alone up by over 2p/litre this winter as a result of higher inclusion rates and costs.

“Our message is a simple one to all those who buy, use and sell the milk that farmers produce. Farmers need and deserve a market price that fairly reflects the growing value of raw milk, that allows them to reinvest and that gives confidence for the future.

“Any part of the UK market that fails to achieve that risks losing supplies of dairy products to those companies who are taking the future of the British dairy industry seriously; that will be my message to retailers and food service companies in forthcoming meetings.”

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