AHDB has estimated the bill to the industry at £20 million for April and May, with 5,200 farmers suffering a milk price reduction.
Milk market turmoil has placed increasing pressure on UK dairy farmers, with processors issuing price and production reductions alongside deferred payments to negate the impact of Covid-19.
Latest figures from AHDB show more than half of the country’s producers have been impacted by price reductions this spring, totalling an estimated £20 million loss to the sector for April and May.
The data also revealed 500 producers had milk collections cancelled, 500 had payments deferred, 2,200 were asked to reduce milk output and 700 had the volume they get paid a full price on reduced. A number of farmers were likely to suffer more than one of these impacts.
AHDB dairy analyst, Patty Clayton, warned the calculation was ’unlikely to be the end of the financial pressure with further price cuts already announced for May and others likely as well as some significant cashflow challenges for many’.
NFU dairy board chairman, Michael Oakes, said some farmgate prices had dipped as low as 17-22ppl, which he described as ‘unsustainable when their cost of production will be well in excess of that’.
Defra has come under increased pressure to grasp the seriousness of the situation, with NFU president Minette Batters stating the expected dairy hardship payment has not come ‘quick enough’ for farmers battling market collapse.
Progress on getting support for the sector had been ‘torturously slow’, she said.
Despite a 2.4 per cent decline in UK milk production in March, according to Defra data, milk prices continue to deteriorate as the lockdown continues.
Last month saw Muller communicate plans to increase its milk price by 1ppl alongside a reduction in production by 3 per cent.
But the processor has since backtracked, holding the May and June price at 26.25ppl, with claims the increase would be ‘unviable’ due to the rapid decline in returns from commodity products.
Gary Mitchell, NFU Scotland milk committee chairman, spoke of his ‘confusion and concern’ at Muller’s U-turn.
He said: “When requested to cut production a couple of weeks ago, Muller suppliers were willing to step up to the plate as they appreciated the pressures of supply and demand.
“That move to curb production was done on the back of an improving milk price – an improving milk price that has now been taken away in just a few short weeks.”
Pensworth Dairy also announced a 2ppl price decrease from May 1, reducing the standard litre price to 22.5ppl, and Arla confirmed a May milk price drop by 0.9ppl, bringing its conventional and organic prices to 29.89ppl and 38.92ppl respectively.
But despite the drop, Arla continues its lead with the top market price during the time of severe market disruption.
Dairy analyst Ian Potter warned the negative national press about Freshways had registered with customers, with ‘several allegedly exploring how they can distance themselves from the negative press coverage’.
Quoted in a Grocer article, Freshways managing director Bali Nijjar confirmed the processor was in merger talks with Medina and hinted his hopefulness at a ‘quick process’.
More than 1 million litres has been discarded between April 6 and April 20, according to the latest statistics from the Royal Association of British Dairy Farmers (RABDF).
Farmers who have received a reduced price or discarded milk (including sheep and goat milk) as a direct result of Covid-19 restrictions are encouraged to keep responding to the RABDF survey, with the results being fed back to Defra.
RABDF chairman Peter Alvis said: “We continue to monitor the situation regarding the loss in value and all milk being discarded.
“There are about 2 million litres of milk a day that have not found a home in the retail market.
“What our survey shows is the negative impact it is having on those farmers most severely affected. It is imperative farmers continue submitting their information about the volume and value of milk lost so we can keep Defra informed of the size of the challenge this sector faces.
“We request Defra considers the seriousness of the situation and supports these farmers with a hardship payment.
“Any data we can continue feeding into Defra will only go to help this industry’s cause.”
Fill in the survey at www.rabdf.co.uk/survey