Dairy processor Barber’s has announced it will hold its current milk price for December, despite fragility in the market.
The cheese processor will keep its standard litre (4.1% butterfat and 3.28% protein) at 29.8p/litre next month, maintaining the same price for the fourth consecutive month.
However, when applied to milkprices.com’s manufacturing litre (4.2% butterfat and 3.4% protein), this represents an equivalent price of 30.68p/litre.
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Barber’s farmers have a Base Milk Volume, established from their own forecasts, and are paid the standard price up to 8% above this.
Any litres supplied above this are paid at the AHDB’s actual milk price equivalent (AMPE), which is published each month.
The AHDB’s October wholesale dairy market report recorded downbeat market sentiment, with the AMPE falling 3.5p/l to 26.34p/l, which Barber’s milk supply manager, Michael Masters, said sends a “powerful message”.
All dairy markets, except mature cheddar, fell during October, which was largely the result of continued high levels of milk production in the UK and the EU, despite adverse weather conditions.
The AHDB also cites Brexit uncertainty as an increasing additional factor, with short-term deals currently being preferred against longer-term commitments, consequently weakening overall market demand.
“At this juncture, it would be a brave man to predict the average price for the entirety of 2019,” Mr Masters added.
Muller price drop
Muller suppliers will be hit by a 1p/litre price cut for milk delivered in December, the processor announced on Wednesday (31 October).
This will take the Muller Direct standard litre price to 28.5p/litre.
As a non-co-op, the processor has to notify producers of price changes with a month’s notice, in line with the Voluntary Code.
Muller’s farmgate price was unchanged for November, as are prices for the two largest co-ops, First Milk and Arla, which are not obliged to report December prices until the end of November.
Wider milk market
Milk producers have been warned to expect a drop of more than 50% in profit for the milk year to 31 March 2019 and greater pressure in the following year.
Promar International’s latest Farm Business Accounts results across 500 herds averaging 210 cows show a big improvement in profit after depreciation for the year to 31 March 2018, with a 69% jump to £96,318.
However, wholesale dairy commodity markets are mostly under downwards pressure, and rising production costs have led to the prediction of a severe drop in average profits to £40,000 or lower for the current milk year.