Farmgate milk prices likely to strengthen this autumn

The dairy sector looks to be gearing up for a busy autumn, with demand for dairy remaining relatively strong despite high milk volumes.

Several processors, including Muller, have already announced farmgate milk price rises for September, and further uplifts into October now appear to be on the cards.

Bali Nijjar, managing director at Freshways, said: “UK milk production remains approximately 5% above last year, even post-flush.

Prices being offered still remain subdued, but as farm volumes reduce over the coming six to eight weeks and demand starts to rise from mid-September, retail prices are anticipated to increase.”

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He confirmed that Freshways will increase its farmgate milk price by 2p/litre from 1 October.

Mr Nijjar said: “We are confident this increase will be sustainable throughout the winter months. Cream prices have remained fairly stable over the past four months.

“However, as farm fats declined during spring, gradual increases in prices have been observed.”

Dairy commodity goods appear strong at wholesale, with cream, butter and cheese all performing well in domestic markets.

Retail sales are also buoyant, with total spend up by 4% year-on-year in the 52 weeks ending 12 July, according to Neilson IQ figures.

In Europe, markets have seen stable demand at retail and from food processing sectors, with increased interest in cheese and milk powders.

Wholesale values at Global Dairy Trade auctions have generally improved during the past month.

However, trade at the latest auction on 19 August dropped marginally with the GDT price index down 0.3% to average $4,291/t (£3,184), with prices lower for cheddar, mozzarella and skimmed milk powder.

Investment in UK dairy

Freshways has continued to invest in its relocation to a new site in West Bromwich, which will have capacity to handle up to 500m litres of milk each year once in full operation.

Meanwhile, Trewithen Dairy in Cornwall has been rebranded as Ehrmann Cornish Dairy, following its acquisition by German dairy group Ehrmann last summer. The firm is investing £20m in a new dessert production facility on site in Cornwall, which is due for completion in 2026.

Ed Watts, chief commercial officer of Ehrmann Cornish Dairy, said “The bold new chapter of Ehrmann Cornish Dairy reflects our ambition to grow a future-focused dairy business in the UK, based on innovation, sustainability and local sourcing.”