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Dairy farmers have a 'wrestle on their hands' to get milk prices higher

Farmers should be getting between 30 and 32ppl in August and September but non-aligned producers supplying the liquid market will ‘have a wrestle on their hands’ to get it, according to dairy analyst Chris Walkland.

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Farmers should be getting between 30 and 32ppl in August and September but non-aligned producers supplying the liquid market will ‘have a wrestle on their hands’ to get it, according to dairy analyst Chris Walkland.

 

Following Arla’s price increase of 1.44ppl for July, Mr Walkland said current milk prices were about where they should be at the moment.

 

“To put that in context back in the Autumn you were getting about 4p less than what you should have got,” he said.


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“August is the crunch month and I expect very decent increases by then. If you do not get them then the processors will have to be very creative with their excuses.”

 

He said long term contracts, increased production in response to high prices and Arla’s moves would dictate how high prices went, as many liquid companies would not pay much more than Arla.

 

He also questioned whether there would be any need for processors to pay out more than 30ppl.

 

Content

 

“When the price gets over 30ppl will you lot sit back, happy and content, or will you go for the extra tuppence if it is there?”

 

John Allen from Kite Consulting agreed other processors would now follow the cooperative.

Allen

“In terms of how much, they will probably have to match it. Some might even try and beat that,” he said.

 

He added there was also still some increase ‘in the pipeline’ from the exchange rate.

 

But Mr Walkland warned farmers would not see prices in the mid to high 30s as history showed farmers received about 5 to 6ppl less than the highs, but received about 5 to 6ppl more than the lows of Actual Milk Price Equivalent prices too.

 

“What matters is not hitting the absolute peak of high prices but the longevity you get high prices for,” he said.

 

“The focus of this industry needs to change from short-term, emotion-ridden pricing paranoia to one where a longer-term view is taken.”

 

Futures

 

Mr Allen said the changes in the futures markets illustrated how volatile the markets were.

 

“The futures markets are over 30ppl, just like they were pointing in February to 23ppl. We did lose some prices in early spring.

 

“In many ways, I think it will mean farmers welcome tools to manage volatility. People will be watching Muller’s futures contract very carefully.”

 

He added: “My advice would be use this bonus period to pay down debt and get your business in shape.”

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