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Dairy Farmer magazine's October 2016 digital edition

Insights

Don’t miss this month’s new look Dairy Farmer. Take a look at the digital edition today.

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A word from the Editor

Anyone keeping half a weather eye on the GDT and other trade indicators will be amazed by how markets have rocketed over the past couple of months and, after the dreadful mire we’ve been stuck in, you would think everyone would be cock-o-hoop.

 

Not so. With cream in the stratosphere at £1.70 and butter and cheese firmly in the £3000 a tonne territory, producers are rightly astounded by why they are not seeing more in their milk cheques and starting to wonder whether their turn will ever come.

 

Many are in desperate plights with the margin-pinched non-aligned still hanging in at the 20ppl mark and desperate to get back on a more even keel before the winter feed round starts to bite.

 

It’s the classic one-sided quick-drop, slow-rise scenario but exacerbated this time by the fact that processors, in the main, have sold forward at depressingly give-away prices. In essence they have been taken by complete surprise by the fall in volumes and soaring prices and were totally unprepared for it.

 

Producers are quite rightly getting angry as they bridle at their second-class status and are starting to question just what is going on here. The trouble is while processors set about restoring their own books first, it means the economic impact of the protracted downturn for many producers persists unabated, pushing them to question their very future in the industry.

 

Milk volumes are almost certain to decline further and next year’s supplies are likely to be below processor requirements, and that is before the EU’s reduction scheme, with its 12p carrot for milk foregone, starts to bite.

 

Processors could soon start to bemoan the lack of milk and the impact it will have on their businesses, but perhaps they should ask themselves whether they shouldn’t be doing a bit more now to help avert this situation!

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