Saved by the bell. Or, more accurately, by Europe, which is more than a touch ironic given our hightail Brexit retreat.
That is the situation UK producers find themselves in right now, with their milk price majorly supported by what is happening across on the continent as opposed to what is happening on these shores.
Static EU production is fortunately stopping us sinking into the spring price mire as a result of
excess litres here, and there is li le doubt that the Arla (European) price is keeping the likes of Dairy
Crest and others pretty keen.
However, its steadying hand is not working with everyone. Muller opted not to pursue that
course a few months ago, and the likes of Grahams and other liquid dairies have gone with Muller rather than pace-setting Arla.
But what if Europe’s volumes had been high too? The spot price says it all, slumping down to the 13ppl mark, and even milk being dumped because there is no spare capacity in our plants. For a start, commodity prices, especially butter, would have come under severe pressure, and that would have badly impacted milk processors. Remember, major financial losses for processors in spring have a carryover effect and result in a significant delay to milk price increases later on when things invariably tighten.
The last time the UK was overwhelmed with milk and prices crashed was back in 2015/16, when several processors turned to A&B pricing. Some adopted it and used it well, but others got bogged down in controversy and it mostly lost
credibility and was scrapped.
Whatever the causes of surplus production, at least A&B differentiated between regular and excess
supplies and reacted proportionately. Without it, all producers with certain processors are being, or could be, heavily penalised because a few suppliers have expanded without regard to the marketplace.
The likelihood is that this unfairness will not be allowed to continue. We may have escaped the worst effects of our record-breaking production this time by the saving grace of Europe, but, with
Brexit looming, we cannot a ord to rely on any such happenstance in future.