Fears have been raised over the processing capacity of the UK to deal with this year’s spring flush, as AHDB warns GB milk production could hit a 29-year high.
Brexit uncertainty was adding to concerns, with questions over whether mainland GB would need to find extra capacity to process Northern Irish milk as well as uncertainties over what will happen with exports.
With farmers short of forage due to weather conditions last year, many have fed more concentrates over winter, boosting milk yields.
Chris Gooderham, AHDB head of market specialists, said: “Cows are in really good condition and are milking extremely well.”
He added good weather meant many farmers had turned cows out earlier than usual.
“The worry of course is whether we have enough capacity to keep going through the spring flush,” he said.
“We have not been used to that much volume. We have had a few dairy expansions which will help but we have also had some closures.
“With all the things around Brexit there is a risk the Northern Irish milk, which currently goes to Southern Ireland to be processed, could come to mainland GB.
“If there is a tariff going south, then there is another risk the volumes could be higher in GB.”
Dairy analyst Chris Walkland said there was simply ‘too much milk’.
“It is putting markets under negative pressure; it is as simple as that. Some companies are telling their suppliers if you can get another buyer then go. They simply do not want that milk,” he said.
“What is making it worse is Brexit affecting sentiment on trade.”
NFU dairy board chairman Michael Oakes said he believed the real issue was whether the UK could maintain its relationship with Europe.
“Looking at production in the rest of Europe, actually our overproduction is matched by their underproduction,” he said.
“We have an issue if we fall out of Europe. Additional production will add to that.”
NFU Scotland milk chair John Smith said: “Leading on from a good spell of weather and a great grass growth being reported throughout the country, milk supplies have seen a strong increase over the last few weeks.
“Any increase in milk supplies is going to have an effect on the market and our advice to members would be to get in contact with your buyer and keep an open dialogue with them in regard to milk supplies and requirements.”
Cheesemaker Barber’s has warned the latest news on volumes in the UK and Ireland was ‘seriously concerning’ as it announced a price hold for May.
Barber’s said the high UK production was compounded by a huge increase in Irish milk.
The cheesemaker also warned of the threat to cheddar exports, highlighting that while the UK was a net cheddar importer, British cheese exports were of a higher value.
The average exported price of cheddar was £3,700 per tonne last year, while imported cheddar was £2,800/t.
If the proposed tariffs in a no-deal situation were imposed, Barber’s said this would be a ‘stark position for the dairy industry’ with EU tariffs more than seven times as high on UK exports than on imports, the equivalent of 14ppl on exports but only 2ppl on imports.
A spokesperson for the processor said: “From a Barber’s perspective, although our significant export trade is far less exposed to EU markets, the knock-on impact and turbulence of other UK processors potentially needing to find new markets to address the potential situation is extremely serious.”
NFU Scotland has urged farmers to work in partnership with buyers to balance supply and demand, as First Milk announces a price hold for May.
NFU Scotland milk board chairman John Smith said the announcement demonstrated ‘a more confident picture’, with processing capacity at both its Harverfordwest and Lake District creameries capable of handling 40,000 tonnes.
“With an expected higher spring flush, the company expects to be delivering strong performances through its contracts and customer base and a weaker spot price created by unplanned milk production in the UK,” said Mr Smith.