Welcome milk price increase as daily supplies tumble

Tightening milk supply, in part due to the ongoing drought affecting much of England and all of Wales, has contributed to another round of farmgate price increases.

Arla, for example, is lifting its August conventional milk price by 0.88p/litre, taking its headline rate to 38.15p for a 4.2% butterfat, 3.4% protein manufacturing litre, based on every-other-day collection.

This follows a 1.32p/litre increase in July.

See also: Cash planning and management advice as dairy profits yo-yo

“Global milk supplies have stabilised on a high level, and prices on the global commodities market are overall stable,” said a statement. “However, the market for proteins is increasing.” 

Arla is also quoting a liquid price of 36.57p/litre for 4% fat and 3.3% protein conventional milk, while organic milk will remain unchanged for August at 56.43p/litre, as the market outlook remains “uncertain”.

Meanwhile, West Country-based Barber’s Cheesemakers is offering its suppliers an extra 1p/litre in August – on top of the 1.5p extra it had already announced – with a further 1.5p/litre to come in September.

Applied to a milkprices.com manufacturing litre of 4.2% butterfat and 3.4% protein, that achieves an equivalent increase of 4.14p/litre over two months, taking its value to 37.74p.

“”Wholesale dairy markets are beginning to respond  to the tighter milk supply position,” said a statement, adding that the ongoing drought was driving up dairy farmers’ production costs.

Muller and First Milk pay more

Dairy farmers supplying Muller and First Milk can also expect to receive a bit more.

The Muller Advantage price, for example, is set for a 0.5p/litre lift from 1 September to 35p/litre, after the company had held its August value at 34.5p/litre.

Richard Collins, agriculture director at Muller, said: “After many months where collections of raw milk continued to rise and market prices continued to fall, we are pleased to increase our farmgate milk price for September, ensuring our supplying farmers continue to receive a competitive price.”

Muller Advantage is a comprehensive programme which also rewards farmers with a 1p/litre quarterly bonus for delivering herd health and environmental improvements.

First Milk has announced an increase in its standard manufacturing litre, which will rise 2p/litre from 1 September to 34.95p/litre, including the member premium.

Output plummets 

NFU Dairy Board chairman Ian Harvey said the ongoing hot and dry weather was placing immense pressure on dairy farmers across the country.

“It has severely restricted grass growth and diminished pasture quality, with 18.5m litres wiped off milk yields in recent weeks,” he said.

“While this sharp drop in volume has rightfully driven the spot milk price upward, we are continuing to witness an unacceptable disparity in farmgate returns.

“While some farmers are receiving over 40p/litre for their milk, some remain trapped in the mid- to late-20s – well below the cost of production.”

 Mr Harvey said the whole of the supply chain needed to act responsibly to secure a resilient dairy farming sector.

“That includes processors and retailers communicating clearly and fairly with their milk suppliers, complying with the new Fair Dealings legislation, and adhering to open and transparent pricing structures.”

Freshways has previously announced a minimum 3p/litre increase in its milk price from 1 September.