Compiled by FWi staff
THIS was the year of unprecedented cuts in
milk prices. By December, producers were receiving 5ppl less than they
were paid one year before. In theory, the cost of leasing quota should
have fallen by a similar amount to offset the reduction. But prices
remained high and dairy farmers had to tighten their belts.
- Genus claims UK dairy
farmers are tied down by high quota costs which are a straight-jacket on
the industry. “Deregulation was designed to create a more market-led
environment, but instead it has held back those producers wishing to
expand,” says product manager, Mark Woodall.
- Pressure mounts on
milk prices after Milk Marque receives bids for just 75% of the daily
14m litres it offers to the trade. The company is obliged to launch a
second selling round at lower prices. Milk Marques average price will
fall from 25.9ppl to just 23.8ppl, warns industry consultant Mike
Bessey. Prices paid to non-MM members are likely to follow the downward
drift, he says.
- Brokers claim that clean quota prices will rise
as producers cover their excess production following a bungled
announcement by the Intervention Board. IB officials put out the January
production figures showing the UK was over quota, only to revise them
two days later showing a continuing deficit.
- Dairy companies begin pruning the price for direct supplies,
after Milk Marque sees its rates to the trade drop by 2ppl in early
March. Dairy Crest takes almost 3p off its standard litre from 25.68ppl
to 22.70ppl. Other buyers also announce cuts. Northern Milk Partnership
reduces prices by 1.9p to 22.80ppl.
- Unigate announces a
“provisional” cut of 1.75ppl and says it will maintain its “Milk Marque
Plus” premium of 0.8ppl until November.
- Milk producers claim
the size of the reduction is way in excess of that justified by recent
Green Pound reductions.
- Milk super-levy looks increasingly
likely after figures show February production to be 5% over-quota.
Cumulative output is now 20m over target.
- Milk Marque announces
a 2.5ppl milk-price cut. Farmers question the need for prices to fall at
a time when EU butter and skimmed powder markets have been improving.
But Sterlings strength has prevented UK traders from cashing in on the
EU commodity market, counters a Milk Marque spokesman.
leasing prices kick off the new season in April at 9.5ppl. But as more
cows are moved under the cull and milk price cuts begin to bite, 9ppl
will become the norm, say agents.
- Estimates of the UK
super-levy for 1996/7 are raised. Revisions to the Intervention Boards
milk production estimate for March give an extra 7.8m litres after
adjusting for butterfat. As such, the provisional super-levy increases
from £16.5m to £18.6m.
- EU farm commissioner,
Franz Fischler, boosts the prospects for milk quotas when he rejects the
need for “radical reform” in the dairy sector.
seasonality penalties start hitting milk producers, and prices fall into
the “high teens.” Five companies, headed by Milk Marque, take 3ppl off
their June milk cheques in an attempt to achieve a more level supply
profile. Milk Marque members receive just 18ppl for a standard litre of
- Milk Marque announces
its prices to the trade for supplies from 1 October, with quotes between
1.7 and 2.3ppl lower than those currently being paid. The falls will
almost certainly lead to smaller milk cheques in the autumn as the co-op
passes on lower returns to its members.
- Milk Marques market
share slips to 46% as members turn to other buyers or go bust. Lastest
figures show the companys milk sales were 6% down in 1996.
- MD Foods becomes the
first major dairy company to tell its suppliers to expect a 1.5ppl
price-cut in the autumn.
- Milk Marque
confirms it is knocking another 2p off milk prices this autumn, taking
its standard price to just 20ppl. The drop takes the total fall during
the year to 4.5ppl. The company blames the strength of Sterling which
has forced down support prices by 20%. Other milk buyers are thought
likely to follow the 2p price reduction.
- Dairy producers face a
significant downturn in profits as milk price reductions begin to bite.
Tom Kelly, director of consultants Axient, says profits on many farms
could fall by as much as 65%. Nestle joins other companies in announcing
a 2ppl milk-price cut.
- The collapse in
dairy farmer incomes continues, with three of the countrys largest
processors announcing price drops. Unigate issues a new standard litre
price of 20.3ppl with effect from November 1.
- Octobers milk
cheques for September are the last before severe cuts begin to bite.
Lower prices will inevitably lead to lower profits, warn consultants.
should be scrapped and support prices cut by 30% so farmers can compete
on the world market, claims Peter Nash, MAFFs head of milk.
Dairy farmers should not expect to see any improvements in milk prices
during 1998, warns Alan Wiseman, chairman of Robert Wiseman Dairies.
- Milk cheques arrive showing year-on-year deductions of 5ppl.