Milk price heads for a fall

Friday, 20 February, 1998

By Philip Clarke

DAIRY farmers will soon be getting little more than the intervention price for their milk – despite producing some of the highest-quality supplies in the world.

That is the blunt message from ADAS Milk Cheque manager, Ian Powell, commenting on price and margin prospects for the new milk year starting in April.

“Last month we perceived that improved profits for dairy companies and higher world dairy commodity values would increase milk prices in the New Year,” he says. “But the early indications from the latest Milk Marque selling round is for a further fall in milk price from 1 April, estimated at 1 to 1.5p/litre.”

Part of the reason is that dairy companies have been bidding increasingly for the cheapest Milk Marque contract on offer. In the current selling round, about 70% of bids have been for this contract, worth just 19.4p/ litre.

The expectation is that this value will drop to 19p/litre – the Intervention Price Equivalent – before the process is complete later this month.

ADAS Milk Cheque results for December show how much margins have already been hit. “Dairy farmers must take immediate stock of their position and put remedial measures in place to preserve fragile margins over the coming months,” advises Mr Powell.