Milk prices in real terms same as 20 years ago

Average farmgate milk prices in “real terms” are similar to those paid to farmers in 1992, according to a DairyCo report.

The record high average price of 30.77p/litre in June – up 0.81p/litre on May – was similar to June 1992 and lower than the spike in prices in 1995-96, once it was adjusted by the Retail Price Index, taking into account the influence of average UK inflation.

“The continued imbalance between demand and available supply, both within the UK and globally, has meant that the upward trend in milk prices has been maintained,” said the report.

“Although actual prices are the highest on record, in real terms they are lower, which may explain why many farmers feel under pressure despite the current high price level.”

Milk quota

As expected, the UK was well below national milk quota levels for the 2012-13 year, figures released from the Rural Payments Agency confirm.

For the 2012-13 quota year, UK wholesale milk deliveries were 2bn litres under quota at 13bn litres, while UK direct sales were 27.6m litres under the national direct sales quota at 115m litres.

More on this topic

Farmgate milk prices lag behind market returns

Am I on the right milk contract for my business?

Futures markets and commodity risk management online course:

  • Risk management strategies for a more predictable financial performance
  • Educated conversations when collaborating with your advisors
  • Negotiate better prices with your grain merchants

View course