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Lower milk prices challenge farmers

- 27 March 1998
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By Robert Harris

DAIRY farmers are being advised to improve performance or face going under because this years farm-gate price for milk is likely to remain below 19ppl.


Dairy companies are expected to drop their prices after Milk Marques recent April milk price cut of 1.8ppl, bringing the price of a standard litre to 18.2p.


The process has already started. Scottish Milk has announced a standard litre price from April of 18.72ppl, down from 19.87ppl. And 97m litres of milk auctioned recently by United Dairy farmers in Northern Ireland for delivery from April averaged just over 19ppl.


“It would be surprising if dairies did not follow Milk Marque prices down in their own direct buying,” says independent consultant Mike Bessey. Last year, dairy companies paid an average premium over Milk Marque prices of about 1ppl, he adds.


Nestlé cut 1p off April prices for deliveries to Ashbourne and Omagh before the final outcome of the MM selling round, bringing the price down to 20ppl. Farmers should expect further falls of 0.5-1ppl, says the companys Derek Kennedy.


Express Dairies (Northern Foods) has held April prices at 20.7ppl until May, less 2p for seasonality deductions. It will announce new prices in mid-April. MD Foods is informing farmers this week.


Milk Marques 1.8p/litre drop represents a loss of almost £11,000 in profit for the average ADAS Milk Cheque-costed farm, says manager, Ian Powell. The difference in profit margin between average and top 10% producers is 4.5ppl, he notes.


“If a farmer can move from average to the top band, he would offset the whole of the fall in the milk price for the past 12 months.” Business planning is a key to survival, Mr Powell says.

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