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More milk price rises a 'disaster' for dairy farming

Ian Potter has urged farmers to ’get out of the mindset’ of increasing production when prices rise


Alex   Black

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Alex   Black
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More milk price rises a 'disaster' for dairy farming #teamdairy

Milk prices over 30ppl would be an ‘unmitigated disaster’ for the industry, according to industry analyst and Dairy Farmer columnist Ian Potter.

 

As if to reflect Mr Potter’s production warning, Muller confirmed it would hold its standard litre price at 26.69ppl in March, citing ’significant increases’ in volumes and an easing in commodity returns.


Mr Potter urged farmers to ‘get out of the mindset’ of increasing production when prices rise as it would cause a bigger crash when prices fall back down.


It came as analysts warned farmers not to expect price rises after February following signs spot markets had peaked.

 

Hope


Dairy analyst Chris Walkland said he ‘did not have any hopes’ for increases in March.


“I would hope that they stay the same," Mr Walkland said.


“If they were to go down, I think it would be a disaster. It would destroy farmer morale.


“I am optimistic prices will remain at the high 20s but not that they will hit 30. If they did hit 30, the market would overheat.”


Mr Potter said he wanted prices to stabilise at 30ppl as higher prices would encourage farmers to push for more milk.


“The higher the price goes, the bigger the crash will be,” he said.


"Milk prices of 34-35ppl would be an unmitigated disaster."


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Promar Milkminder to November 2016

  • Average milk price for November was 26.245ppl, 1.12ppl higher year-on-year
  • Margin only 0.7ppl higher year-on-year due to increased costs
  • Milk produced has decreased by 2,421 litres
  • Feed costs increased by £386/t

He encouraged farmers to ‘act responsibly’.


“We have got to try and help defend where we have got to now. To those farmers who have got to 28ppl or 30ppl, get some debts paid off and put some away for a rainy day.”


Mr Walkland said he had seen an ‘increasing amount’ of anecdotal evidence farmers were pushing for more milk.

 

Black holes


“I can understand that, they have got a lot of black holes to fill. You have got to do what is right for your business,” he said.


“But what is right for your individual business is not necessarily right for the whole industry.”


Mr Walkland added market prices had been unsustainable, with butter reaching £4,000/tonne.


Mr Potter urged farmers to speak with their milk buyer before increasing production on the back of any rises.


“They want producers to understand: continuing as we were has got to stop.”

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