Milk price may rise as supplies shrink

By Robert Harris

MILK production is falling at an almost unprecedented rate, leading to hopes of further milk price increases in the New Year.

Weekly Intervention Board figures suggest November output could be 70-100m litres short of quota, or up to 10% less than November 1999.

quota link
Bruton Knowles

This, the earlier shortfalls of 4.3% and 6% for September and October deliveries and poor quality forage stocks means many observers believe the chances of the UK meeting quota are now remote.

Indeed Axis, the Midlands-based farmer co-operative, recently announced an extension of its trading allowance to 20%.

This means it will continue to release milk cheques to members who produce up to 20% more milk than their annual quota cover, and is aimed to boost cash flow.

The looming shortage could lead to price pressure in the spring, says independent consultant Michael Bessey.

“Possibly for the first time since the 1930s, there may be an element of competition for milk supplies creeping into the system, especially for liquid milk.”

Talk is of farmgate prices rising by 1ppl from the New Year, and at least as much again in April.

Commodity buyers would have to match most of this increase to secure supplies.

That would return many dairy farmers to profit.

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