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Variation in prices widens at UK processors due to high milk volumes

The gaps between milk prices at UK processors have continued to widen, with processors announcing price drops pointing to high volumes of milk and lower cream returns.

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Meadow Foods announced a price drop of 1.7ppl for September, taking its standard A litre price to 25ppl.

 

It follows a Freshways drop of 2.1ppl to 25ppl, which it also attributed to cream prices and competitors offering at low wholesale prices.

 

But it was opening a wide gap in the range of prices at different UK processors.

 

Meadow Foods highlighted a summer of record milk production, as volumes reached a 29-year high.

 

Mark Chantler, the company’s chief executive, said despite holding its price over the past five months, the pressure from high volumes and lower cream values had meant it could not be maintained.

 

He said: “We will continue to monitor the market and the potential impact of Brexit, and hope that the market returns to a more positive balance swiftly.”

 

And the gap between the Northern Irish and the Great British price has continued to widen ‘unjustifiably’ according to the Ulster Farmers’ Union (UFU).

 

Analysis

 

AHDB figures revealed a gap of 1.5ppl in May between the NI and GB price, with UFU analysis showing the average gap over the past six months was 1.75ppl.

 

UFU deputy president Victor Chestnutt said recent price cuts had hit farmers hard as input costs continued to rise with rumours local processors were planning more cuts.


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“Local dairy processors like to boast about how efficient they are, yet they are trailing behind their GB counterparts,” he said.

 

“GB processors are facing the same market pressures – weak butter price and high volumes of dairy stock in stores, and yet they are able to pay 1.5 pence more per litre for milk.”

 

The UFU said processors needed to be more transparent when it came to pricing and called for processors to explain why the price had fallen and pay the ‘true price’ for milk.

 

“It is essential that all partners in the supply chain are profitable and processors must share market returns with primary producers,” added Mr Chestnutt.

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