Don’t miss this month’s new look Dairy Farmer. Take a look at the digital edition today.
The good news is the GDT is up for the third consecutive time, which is helping drive a positive sentiment in the market.
The bad news is a walloping raft of price cuts are on their way for March, which will do nothing to lift spirits.
With the average price across all nonaligned producers believed to be still more than 28p, let’s hope the positive New Zealand vibes can help arrest further decline. But for that to happen would mean a meteoric GDT rise to lift it above its current 25-26ppl return.
That, however, is not the only challenge ahead, because many now find themselves being paid on a manufacturing litre of 4.2% fat and 3.4% protein, a level which can be difficult to achieve in spring, even in housed cattle.
As a result, producers could easily be down 2ppl on constituents and that is before seasonality kicks in, so the actual banked price may be somewhat adrift from the headline one.
Already Kite Consulting is predicting negative cashflows for some as soon as May, and if that isn’t worrying enough, it doesn’t look like being much brighter post-Brexit either.
In its latest publication, encapsulated in its ‘What will Brexit mean for the UK dairy sector?’, Kite shows only one of four combinations – a weak sterling and hard Brexit – as delivering any sort of return for our milk producers.
With the Irish question demanding some kind of soft Brexit or modified customs union, Kite’s ‘best’ runner looks to be a bit of a donkey in these handicap stakes.
But in the hope of cheering us all up, the authors say at least dairy is likely to be better off than most other sectors, such as beef and arable. Which in itself is little consolation to anyone.
The upshot is that this report serves as yet another warning to our political masters that they need to be working hard to safeguard the future of UK agriculture.
Whether anyone is listening is a different matter!